By Alexis Akwagyiram and Didi Akinyelure

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

For years, mobile payments failed to remove in Nigeria as they have in nations such as Kenya, where Safaricom's M-Pesa cash transfers have actually promoted a culture of cashless payments.

Fear of electronic fraud and slow internet speeds have held Nigerian online customers back but wagering companies states the new, fast digital payment systems underpinning their websites are altering mindsets towards online deals.

"We have actually seen significant development in the variety of payment options that are offered. All that is certainly altering the 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 problems," he said, adding that taxes from sports betting wagering in Lagos State increased 30 percent to 40 percent in 2017 from 2016.

That development 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 central bank and certified 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 mobile phone use and falling data expenses, Nigeria has actually long been seen as a fantastic opportunity for online organizations - once consumers feel comfortable with electronic payments.

Online gambling companies say that is happening, though reaching the 10s of millions of Nigerians without access to banking services remains a difficulty for pure online sellers.

British online wagering 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 market is going," Betway's Nigeria supervisor Lere Awokoya said.

"The development in the variety of fintechs, and the government as an enabler, has helped business to thrive. These technological shifts encouraged Betway to begin running in Nigeria," he stated.

FINTECH COMPETITION

sports betting companies cashing in on the soccer craze worked up by Nigeria's involvement on the planet Cup state they are discovering the payment systems developed by local start-ups such as Paystack are showing popular online.

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

"We included Paystack as one of our payment choices with no excitement, without revealing to our clients, and within a month it shot up to the top most pre-owned payment alternative on the site," stated Akin Alabi, creator of NairabBET.

He stated NairaBET, the nation's 2nd biggest wagering firm, now had 2 million regular consumers on its website, up from 500,000 in 2013, and Paystack stayed the most popular payment alternative considering that 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 funding in Silicon Valley's Y-Combinator program.

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

Paystack, based in the mad Ikeja district of Lagos, said the variety 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 ecosystem of designers had actually emerged around Paystack, developing software to integrate the platform into sites. "We have actually seen a development in that community and they have brought us along," said Quartey.

Paystack said it makes it possible for payments for a variety of wagering companies but likewise a wide variety of services, from utility services to transport business to insurance company Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator program in addition to 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 actually corresponded with the arrival of foreign financiers hoping to tap into sports betting wagering.

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

Russia's 1XBet and Slovakia's DOXXbet have actually both set up in Nigeria in the last two years while Italy's Goldbet was ahead of the trend, taking a 50 percent stake in market leader Bet9ja when the Nigerian firm introduced in 2015.

NairaBET's Alabi stated its sales were divided in between stores and online however the ease of electronic payments, cost of running shops and capability for customers to prevent the stigma of sports betting in public implied online deals would grow.

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

He stated the business, with about 60 percent of Nigeria's sports betting market, had a comprehensive network. Nigerian sports betting stores typically function as social centers where customers can see soccer free of charge while placing bets.

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

Richard Onuka, a factory worker who makes 25,000 naira a month, was focused on a TV screen inside. He said he began gambling three months earlier and bets approximately 1,000 naira a day.

"Since I have been playing I have actually not won anything however I think 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)