By Alexis Akwagyiram and Didi Akinyelure

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

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

Fear of electronic fraud and sluggish web speeds have held Nigerian online customers back but wagering companies says the new, fast digital payment systems underpinning their sites are changing mindsets towards online deals.

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

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

That growth 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 a total 132 billion naira ($420 million). Transactions jumped to 29 million worth 185 billion in 2017 and in the first quarter of 2018 there were almost 10 million worth 61 billion.

With a young population of nearly 190 million, increasing cellphone usage and falling information expenses, Nigeria has actually long been viewed as an excellent chance for online services - once consumers feel comfortable with electronic payments.

Online gambling firms state that is taking place, though reaching the tens of millions of Nigerians without access to banking services remains a difficulty for pure online merchants.

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

"There is a progressive shift to online now, that is where the market is going," Betway's Nigeria supervisor Lere Awokoya stated.

"The growth in the variety of fintechs, and the federal government as an enabler, has helped business to grow. These technological shifts motivated Betway to start running in Nigeria," he stated.
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FINTECH COMPETITION
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sports betting firms cashing in on the soccer craze worked up by Nigeria's involvement in the World Cup say they are finding the payment systems produced by local startups such as Paystack are proving popular online.

Paystack and another regional start-up Flutterwave, both founded in 2016, are supplying competitors for Nigeria's Interswitch which was set up in 2002 and was the main platform by businesses operating in Nigeria.

"We included Paystack as one of our payment options without any fanfare, without revealing to our clients, and within a month it shot up to the number one most pre-owned payment alternative on the website," said Akin Alabi, founder of NairabBET.

He said NairaBET, the country's 2nd biggest wagering firm, now had 2 million routine consumers on its website, 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 2 Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who received early stage financing in Silicon Valley's Y-Combinator programme.

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

Paystack, based in the frenetic Ikeja district of Lagos, said the number of month-to-month deals it processed rose 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 each and every single month," said Emmanuel Quartey, Paystack's head of growth.

He stated an environment of developers had emerged around Paystack, creating software application to integrate the platform into sites. "We have seen a growth in that neighborhood and they have carried us along," said Quartey.

Paystack stated it allows payments for a variety of wagering firms but likewise a large range of services, from utility services to carry business to insurance company Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is also backed by the Y-Combinator program along with 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 corresponded with the arrival of foreign investors wanting to take advantage of sports betting wagering.

Industry experts 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 established.

Russia's 1XBet and Slovakia's DOXXbet have actually both established in Nigeria in the last two years while Italy's Goldbet led the trend, taking a half stake in market leader Bet9ja when the Nigerian company introduced in 2015.

NairaBET's Alabi said its sales were divided between shops and online however the ease of electronic payments, expense of running shops and capability for customers to avoid the stigma of gambling in public meant online deals would grow.

But in spite of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was necessary to have a store network, not least due to the fact that numerous consumers still remain hesitant to spend online.

He said the business, with about 60 percent of Nigeria's sports betting market, had an extensive network. Nigerian sports betting shops typically serve as social hubs where customers can see soccer free of charge while placing bets.
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At a BetKing hall deep inside the busy Oshodi market in Lagos, lots of soccer fans gathered to view Nigeria's last heat up video game before the World Cup.

Richard Onuka, a factory worker who earns 25,000 naira a month, was fixated on a television screen inside. He stated he started sports betting 3 months ago and bets up to 1,000 naira a day.

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