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 innovation firms that are beginning to make online companies more feasible.

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

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

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

"The operators will opt for whoever is faster, whoever can connect to their platform with less problems and problems," he stated, including that taxes from sports betting wagering 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 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 very first quarter of 2018 there were nearly 10 million worth 61 billion.

With a young population of almost 190 million, rising cellphone use and falling information costs, Nigeria has long been viewed as a great chance for online businesses - once consumers feel comfortable with electronic payments.

Online gaming companies say that is taking place, though reaching the tens of countless Nigerians without access to banking services remains a challenge for pure online merchants.

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

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

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

FINTECH COMPETITION

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

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

"We added Paystack as one of our payment options with no fanfare, without revealing to our customers, and within a month it soared to the primary most secondhand payment alternative on the site," stated Akin Alabi, creator of NairabBET.

He said NairaBET, the country's 2nd most significant sports betting company, now had 2 million regular consumers on its website, up from 500,000 in 2013, and Paystack stayed the most popular payment choice considering that it was included late 2017.

Paystack was set up by two Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who got early phase funding in Silicon Valley's Y-Combinator programme.

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, stated the number 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 every single month," said Emmanuel Quartey, Paystack's head of growth.

He stated a community of designers had actually emerged around Paystack, developing software to incorporate the platform into sites. "We have actually seen a development because community and they have carried us along," stated Quartey.

Paystack stated it allows payments for a variety of wagering companies but likewise a large range of businesses, from utility services to transfer business to insurer Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator programme along with investor 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 hoping to take advantage of sports betting wagering.

Industry specialists say the sector creates about $1 billion a year and is 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 established in Nigeria in the last 2 years while Italy's Goldbet was ahead of 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 stores and online however the ease of electronic payments, cost of running shops and ability for customers to avoid the stigma of gambling in public implied online deals would grow.

But despite advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was essential to have a store network, not least because numerous clients still remain unwilling to spend online.

He said the company, with about 60 percent of Nigeria's sports betting market, had a substantial network. Nigerian sports betting shops typically serve as social hubs where customers can enjoy soccer free of charge while placing bets.

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

Richard Onuka, a factory employee who makes 25,000 naira a month, was fixated on a TV screen inside. He said he started sports betting 3 months back and bets up to 1,000 naira a day.

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