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By Alexis Akwagyiram and Didi Akinyelure

LAGOS, June 25 (Reuters) - Online sports betting is growing in soccer-mad Nigeria mostly thanks to payment systems developed by homegrown innovation companies that are beginning to make online businesses more practical.
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For years, mobile payments failed to take off in Nigeria as they have in countries such as Kenya, where Safaricom's M-Pesa money transfers have actually cultivated a culture of cashless payments.

Fear of electronic scams and speeds have actually held Nigerian online customers back however sports betting firms states the new, fast digital payment systems underpinning their websites are altering mindsets towards online deals.

"We have seen considerable growth in the variety of payment services that are readily available. All that is certainly altering the video gaming space," said Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria's business capital.

"The operators will go with whoever is quicker, whoever can link to their platform with less issues and problems," he stated, adding that taxes from sports betting in Lagos State increased 30 percent to 40 percent in 2017 from 2016.

That growth has been matched by an increase in web payments, according to data from the Nigeria Inter-Bank Settlement System (NIBSS), which is owned by the main bank and licensed banks.

In 2016, there were 14 million web payments worth an overall 132 billion naira ($420 million). Transactions leapt to 29 million worth 185 billion in 2017 and in the first quarter of 2018 there were nearly 10 million worth 61 billion.

With a young population of nearly 190 million, rising smart phone usage and falling information expenses, Nigeria has long been viewed as a fantastic opportunity for online services - once consumers feel comfortable with electronic payments.

Online gaming firms state that is occurring, though reaching the tens of countless Nigerians without access to banking services stays a challenge for pure online sellers.

British online sports betting firm Betway opened its first African business in Kenya in 2015, followed by Uganda, Ghana and South Africa. It launched in Nigeria in January.

"There is a gradual shift to online now, that is where the industry is going," Betway's Nigeria manager Lere Awokoya stated.

"The growth in the variety of fintechs, and the federal government as an enabler, has assisted the business to grow. These technological shifts encouraged Betway to begin operating in Nigeria," he stated.

FINTECH COMPETITION

sports betting companies capitalizing the soccer craze worked up by Nigeria's involvement worldwide Cup say they are finding the payment systems produced by local start-ups such as Paystack are showing popular online.

Paystack and another local startup Flutterwave, both founded in 2016, are offering competition for Nigeria's Interswitch which was set up in 2002 and was the primary platform utilized by organizations running in Nigeria.

"We included Paystack as one of our payment options with no excitement, without announcing to our clients, and within a month it soared to the number one most used payment option on the site," stated Akin Alabi, creator of NairabBET.

He stated NairaBET, the country's 2nd greatest wagering company, now had 2 million regular clients on its site, up from 500,000 in 2013, and Paystack stayed the most popular payment choice since it was added in late 2017.

Paystack was set up by two Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who received early stage funding in Silicon Valley's Y-Combinator programme.

In December 2016, it raised $1.3 million from financiers consisting of China's Tencent and Comcast Ventures in the United States.

Paystack, based in the frenetic Ikeja district of Lagos, said the number of regular monthly deals it processed increased from about 8,000 in early 2016 to more than 900,000 as of June 2018.

"In early 2016 we were processing about $3,000 a month. Today we process well over $11 million every month," stated Emmanuel Quartey, Paystack's head of growth.

He said an environment of designers had emerged around Paystack, producing software to integrate the platform into websites. "We have actually seen a development in that community and they have actually brought us along," stated Quartey.

Paystack said it enables payments for a variety of sports betting companies but also a wide variety of businesses, from utility services to transfer companies to insurer Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is also backed by the Y-Combinator programme as well as endeavor capitalists Greycroft Partners and Green Visor Capital and the Omidyar Network. It raised $10 million in 2015.

FOREIGN INVESTMENT

Shifts in Nigeria's payment culture have actually accompanied the arrival of foreign investors intending to take advantage of sports betting wagering.

Industry specialists state the sector produces about $1 billion a year and is most likely to grow faster than in South Africa and Kenya where business is more developed.

Russia's 1XBet and Slovakia's DOXXbet have both established in Nigeria in the last two years while Italy's Goldbet was ahead of the pattern, taking a half stake in market leader Bet9ja when the Nigerian company launched in 2015.

NairaBET's Alabi stated its sales were split between shops and online but the ease of electronic payments, expense of running stores and capability for customers to prevent the stigma of sports betting in public meant online deals would grow.

But despite advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was crucial to have a shop network, not least due to the fact that numerous clients still stay unwilling to invest online.

He said the business, with about 60 percent of Nigeria's sports betting wagering market, had an extensive network. Nigerian sports betting stores typically serve as social centers where consumers can enjoy soccer complimentary of charge while putting bets.

At a BetKing hall deep inside the dynamic Oshodi market in Lagos, dozens of soccer fans gathered to see Nigeria's last heat up video game before the World Cup.

Richard Onuka, a factory employee who makes 25,000 naira a month, was fixated on a television screen inside. He said he started sports betting three months back and bets approximately 1,000 naira a day.

"Since I have actually been playing I have actually not won anything however I believe that a person day I will win," said Onuka. ($1 = 314.5000 naira) (Reporting by Alexis Akwagyiram and Didi Akinyelure in Lagos