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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 fostered a culture of cashless payments.

Fear of electronic fraud and slow internet speeds have held Nigerian online consumers back but betting firms say the new, fast digital payment systems underpinning their websites are changing attitudes towards online transactions. “We have seen significant growth in the number of payment solutions that are available. All that is definitely changing the gaming space,” said Seun Anibaba, CEO of Lagos State Lotteries Board, gaming regulator in Nigeria’s commercial capital.

“The operators will go with whoever is faster, whoever can connect to their platform with fewer issues and glitches,” he said, adding that taxes from sports betting in Lagos State rose 30 per cent to 40 per cent in 2017 from 2016. That growth has been matched by a rise 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 a total 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 use and falling data costs, Nigeria has long been seen as a great opportunity for online businesses – once consumers feel comfortable with electronic payments.

Online gambling firms say that is happening, though reaching the tens of millions of Nigerians without access to banking services remains a challenge for pure online retailers. British online 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 said. “The growth in the number of fintechs, and the government as an enabler, has helped the business to thrive. These technological shifts encouraged Betway to start operating in Nigeria,” he said.

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Betting firms cashing in on the soccer frenzy whipped up by Nigeria’s participation in the World Cup say they are finding the payment systems created by local startups such as Paystack are proving popular online. Paystack and another local startup Flutterwave, both founded in 2016, are providing competition for Nigeria’s Interswitch which was set up in 2002 and was the main platform used by businesses operating in Nigeria.

“We added Paystack as one of our payment options without any fanfare, without announcing to our customers, and within a month it shot up to the number one most used payment option on the website,” said Akin Alabi, founder of NairabBET. He said NairaBET, the country’s second-biggest betting firm, now had 2 million regular customers on its website, up from 500,000 in 2013, and Paystack remained the most popular payment option since it was added in late 2017.

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Paystack was set up by two Nigerian computer science 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 investors including China’s Tencent and Comcast Ventures in the United States. Paystack, based in the frenetic Ikeja district of Lagos, said the number of monthly transactions it processed rose 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 single month,” said Emmanuel Quartey, Paystack’s head of growth. He said an ecosystem of developers had emerged around Paystack, creating software to integrate the platform into websites.

“We have seen a growth in that community and they have carried us along,” said Quartey. Paystack said it enables payments for a number of betting firms but also a wide range of businesses, from utility services to transport companies to insurer Axa Mansard. Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is also backed by the Y-Combinator programme as well as venture capitalists Greycroft Partners and Green Visor Capital and the Omidyar Network. It raised $10 million last year.

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Shifts in Nigeria’s payment culture have coincided with the arrival of foreign investors hoping to tap into sports betting. Industry experts say the sector generates about $1 billion a year and is likely to grow faster than in South Africa and Kenya where the 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 trend, taking a 50 per cent stake in market leader Bet9ja when the Nigerian firm launched in 2015.

NairaBET’s Alabi said its sales were split between shops and online but the ease of electronic payments, cost of running shops and ability for customers to avoid the stigma of gambling in public meant online transactions would grow. But despite advances in digital payments, Kunle Soname – chairman and co-founder of Bet9ja – said it was important to have a shop network, not least because many customers still remain reluctant to spend online. He said the company, with about 60 per cent of Nigeria’s sports betting market, had an extensive network.

Nigerian betting shops often act as social hubs where customers can watch soccer free of charge while placing bets. At a BetKing hall deep inside the bustling Oshodi market in Lagos, dozens of soccer fans gathered to watch Nigeria’s final warm-up game before the World Cup. Richard Onuka, a factory worker who earns 25,000 naira a month, was fixated on a TV screen inside. He said he started gambling three months ago and bets up to 1,000 naira a day. “Since I have been playing I have not won anything but I believe that one day I will win,” said Onuka.

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