By Alexis Akwagyiram and Didi Akinyelure

LAGOS, June 25 (Reuters) - Online sports betting is flourishing in soccer-mad Nigeria mostly thanks to payment systems established by homegrown technology firms that are beginning to make online companies more feasible.

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

Fear of electronic scams and slow web speeds have actually held Nigerian online customers back however wagering companies states the new, fast digital payment systems underpinning their sites are changing attitudes towards online deals.

"We have actually seen considerable development in the variety of payment solutions that are available. All that is absolutely altering the video gaming area," said Seun Anibaba, CEO of Lagos State Lotteries Board, gaming regulator in Nigeria's commercial capital.

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

That growth has been matched by a rise 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 first quarter of 2018 there were nearly 10 million worth 61 billion.

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

Online sports betting firms state that is taking place, though reaching the 10s of countless Nigerians without access to banking services stays a challenge for pure online sellers.

British online sports betting firm Betway opened its very first African service 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 supervisor Lere Awokoya stated.

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

FINTECH COMPETITION

sports betting companies cashing in on the soccer frenzy whipped up by Nigeria's involvement on the planet Cup say they are finding the payment systems created by local start-ups such as Paystack are proving popular online.

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

"We added Paystack as one of our payment options without any fanfare, without revealing to our consumers, and within a month it soared to the top most secondhand payment alternative on the website," stated Akin Alabi, creator of NairabBET.

He said NairaBET, the country's 2nd greatest wagering company, now had 2 million regular clients on its website, up from 500,000 in 2013, and Paystack remained the most popular payment option since it was included late 2017.

Paystack was set up by 2 Nigerian computer science graduates, Shola Akinlade and Ezra Olubi, who got early phase funding 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 mad Ikeja district of Lagos, said the number of regular 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 each and every single month," said Emmanuel Quartey, Paystack's head of growth.

He stated an ecosystem of developers had actually emerged around Paystack, developing software to incorporate the platform into websites. "We have actually seen a growth in that community and they have actually brought us along," said Quartey.

Paystack stated it enables payments for a variety of sports betting companies however likewise a vast array of businesses, from utility services to carry companies to insurer Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is also backed by the Y-Combinator programme in addition to 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 corresponded with the arrival of foreign financiers intending to tap into sports betting.

Industry experts state the sector produces about $1 billion a year and is likely to grow faster than in South Africa and Kenya where the company is more established.

Russia's 1XBet and Slovakia's DOXXbet have 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 introduced in 2015.

NairaBET's Alabi said its sales were split between shops and online but the ease of electronic payments, cost of running stores and ability for consumers to prevent the stigma of sports betting in public meant online transactions 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 because many customers still remain reluctant to invest online.

He stated the company, with about 60 percent of Nigeria's sports betting market, had a comprehensive network. Nigerian sports betting stores frequently function as social hubs where customers can enjoy soccer complimentary of charge while placing bets.

At a BetKing hall deep inside the busy Oshodi market in Lagos, lots of soccer fans gathered to see Nigeria's final warm up video game before the World Cup.

Richard Onuka, a factory employee who earns 25,000 naira a month, was fixated on a TV screen inside. He stated he began 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 believe that a person day I will win," stated Onuka. ($1 = 314.5000 naira) (Reporting by Alexis Akwagyiram and Didi Akinyelure in Lagos; editing by David Clarke)