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By Alexis Akwagyiram and Didi Akinyelure

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

Fear of electronic scams and sluggish internet speeds have actually held Nigerian online consumers back but sports betting firms states the new, quick digital payment systems underpinning their websites are changing attitudes towards online transactions.

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

"The operators will opt for whoever is quicker, whoever can connect to their platform with less problems and glitches," he stated, adding that taxes from sports betting wagering 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 central 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 mobile phone usage and falling data costs, Nigeria has long been viewed as a terrific opportunity for online organizations - once customers feel comfortable with electronic payments.
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Online sports betting firms state that is taking place, though reaching the tens of countless Nigerians without access to banking services stays an obstacle for pure online merchants.

British online wagering firm Betway opened its very first African business 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 industry is going," Betway's Nigeria manager Lere Awokoya stated.
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"The growth in the number of fintechs, and the federal government as an enabler, has actually assisted business to grow. These technological shifts encouraged Betway to start operating in Nigeria," he stated.

FINTECH COMPETITION
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sports betting firms cashing in on the soccer craze worked up by Nigeria's participation in the World Cup say they are discovering the payment systems developed by local startups such as Paystack are showing popular online.

Paystack and another local start-up Flutterwave, both established in 2016, are offering competition for Nigeria's Interswitch which was set up in 2002 and was the main platform used by companies running in Nigeria.

"We included Paystack as one of our payment options without any fanfare, without announcing to our clients, and within a month it shot up to the primary most used payment choice on the site," said Akin Alabi, creator of NairabBET.
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He said NairaBET, the nation's 2nd most significant sports betting firm, now had 2 million routine clients on its site, up from 500,000 in 2013, and Paystack stayed the most popular payment option since it was added in late 2017.
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Paystack was established by two Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who received early phase financing in Silicon Valley's Y-Combinator program.

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 variety of monthly transactions 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," stated Emmanuel Quartey, Paystack's head of development.

He stated a community of developers had emerged around Paystack, producing software to integrate the platform into websites. "We have actually seen a growth because community and they have actually brought us along," said Quartey.

Paystack stated it allows payments for a number of wagering companies but also a large range of organizations, from utility services to transport business to insurance provider Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator program in addition to venture capitalists Greycroft Partners and Green Visor Capital and the Omidyar Network. It raised $10 million last year.

FOREIGN INVESTMENT

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

Industry professionals say 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 actually both set up in Nigeria in the last 2 years while Italy's Goldbet was ahead of the pattern, taking a 50 percent stake in market leader Bet9ja when the Nigerian firm released in 2015.

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

But regardless of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was very important to have a store network, not least since lots of customers still stay unwilling to spend online.
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He said the company, with about 60 percent of sports betting market, had an extensive network. Nigerian sports betting stores typically act as social hubs where consumers can view soccer free of charge while positioning bets.

At a BetKing hall deep inside the dynamic Oshodi market in Lagos, lots of soccer fans collected to enjoy Nigeria's final heat up game before the World Cup.

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

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