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By Alexis Akwagyiram and Didi Akinyelure

LAGOS, June 25 (Reuters) - Online sports betting is flourishing in soccer-mad Nigeria largely thanks to payment systems developed by homegrown innovation companies that are starting to make online companies more practical.

For many years, mobile payments stopped working to take off in Nigeria as they have in nations such as Kenya, where Safaricom's M-Pesa cash transfers have cultivated a culture of cashless payments.

Fear of electronic scams and sluggish web speeds have held Nigerian online customers back however wagering firms states the brand-new, fast digital payment systems underpinning their sites are altering mindsets towards online deals.

"We have seen considerable development in the variety of payment solutions that are offered. All that is definitely altering the video gaming space," said Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria's industrial capital.

"The operators will choose whoever is faster, whoever can connect to their platform with less concerns and glitches," he said, including that taxes from sports betting in Lagos State increased 30 percent to 40 percent in 2017 from 2016.

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

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

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

Online sports betting firms state that is occurring, though reaching the 10s of countless Nigerians without access to banking services remains a difficulty for pure online merchants.

British online sports betting firm Betway opened its very first African company in Kenya in 2015, followed by Uganda, Ghana and South Africa. It introduced 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 development in the variety of fintechs, and the federal government as an enabler, has helped business to flourish. These technological shifts motivated Betway to begin running in Nigeria," he stated.

FINTECH COMPETITION

sports betting firms cashing in on the soccer craze whipped up by Nigeria's involvement in the World Cup state they are finding the payment systems developed by regional startups such as Paystack are proving popular online.

Paystack and another local startup Flutterwave, both established in 2016, are for Nigeria's Interswitch which was established in 2002 and was the primary platform used by businesses operating in Nigeria.

"We included Paystack as one of our payment options with no fanfare, without announcing to our clients, and within a month it shot up to the top most used payment option on the site," said Akin Alabi, creator of NairabBET.

He said NairaBET, the nation's second most significant wagering firm, now had 2 million regular consumers on its site, up from 500,000 in 2013, and Paystack remained the most popular payment option considering that it was included late 2017.

Paystack was established by 2 Nigerian computer science graduates, Shola Akinlade and Ezra Olubi, who received early stage funding in Silicon Valley's Y-Combinator program.

In December 2016, it raised $1.3 million from investors including China's Tencent and Comcast Ventures in the United States.
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Paystack, based in the frenetic Ikeja district of Lagos, stated the number of monthly transactions it processed increased from about 8,000 in early 2016 to more than 900,000 since June 2018.

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

He stated an environment of designers had emerged around Paystack, producing software application to incorporate the platform into websites. "We have actually seen a growth in that neighborhood and they have actually carried us along," said Quartey.

Paystack stated it makes it possible for payments for a number of wagering firms however likewise a wide variety of services, from utility services to transfer companies to insurer Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator programme along with investor 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 accompanied the arrival of foreign investors hoping to tap into sports betting.

Industry specialists state the sector creates 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 set up 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 firm released in 2015.

NairaBET's Alabi said its sales were divided between stores and online however the ease of electronic payments, expense of running shops and ability for clients to prevent the preconception of gaming in public suggested online deals would grow.

But in spite of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was essential to have a shop network, not least because many customers still remain reluctant to invest online.

He stated the business, with about 60 percent of Nigeria's sports betting market, had a substantial network. Nigerian sports betting shops frequently function as social centers where consumers can watch soccer complimentary of charge while putting bets.

At a BetKing hall deep inside the busy Oshodi market in Lagos, lots of soccer fans collected to watch Nigeria's last heat up video game before the World Cup.
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Richard Onuka, a factory employee who makes 25,000 naira a month, was focused on a TV screen inside. He stated he began sports betting three months ago and bets as much as 1,000 naira a day.

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