By Alexis Akwagyiram and Didi Akinyelure

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

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

Fear of electronic scams and sluggish web speeds have held Nigerian online consumers back but sports betting companies says the new, quick digital payment systems underpinning their websites are changing mindsets towards online deals.

"We have actually seen considerable development in the variety of payment services that are offered. All that is absolutely altering the video 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 quicker, whoever can connect to their platform with less issues and glitches," he stated, adding that taxes from sports betting in Lagos State rose 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 reserve bank and licensed 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 very first quarter of 2018 there were nearly 10 million worth 61 billion.

With a young population of nearly 190 million, increasing mobile phone usage and falling data expenses, Nigeria has actually long been seen as an excellent opportunity for online services - once customers feel comfortable with electronic payments.

Online gaming firms state that is happening, though reaching the tens of countless Nigerians without access to banking services stays an obstacle for pure online retailers.

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

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

"The growth in the variety of fintechs, and the federal government as an enabler, has actually assisted the service to flourish. These technological shifts motivated Betway to begin running in Nigeria," he stated.

FINTECH COMPETITION

sports betting firms cashing in on the soccer frenzy worked up by Nigeria's involvement worldwide Cup state they are discovering the payment systems created by regional startups such as Paystack are showing popular online.

Paystack and another regional startup Flutterwave, both established in 2016, are supplying competition for Nigeria's Interswitch which was established in 2002 and was the main platform utilized by businesses running in Nigeria.

"We added Paystack as one of our payment options with no excitement, without announcing to our clients, and within a month it shot up to the primary most secondhand payment choice on the website," said Akin Alabi, founder of NairabBET.

He said NairaBET, the nation's second greatest wagering company, now had 2 million routine customers on its website, up from 500,000 in 2013, and Paystack stayed the most popular payment alternative since it was included in late 2017.

Paystack was established by two Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who got early phase financing 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, stated the number of monthly deals 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," stated Emmanuel Quartey, Paystack's head of growth.

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

Paystack said it allows payments for a variety of sports betting companies however also a large range of services, from utility services to transfer companies to insurance provider Axa Mansard.

Flutterwave, co-founded by Nigerian business owner 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 coincided with the arrival of foreign investors hoping to use sports betting wagering.

Industry specialists say the sector produces 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 two years while Italy's Goldbet led the pattern, taking a 50 percent stake in market leader Bet9ja when the Nigerian company introduced in 2015.

NairaBET's Alabi said its sales were split in between shops and online however the ease of electronic payments, cost of running shops and capability for consumers to prevent the stigma of sports betting in public suggested online deals would grow.

But despite advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was necessary to have a shop network, not least because lots of consumers still stay hesitant to spend online.

He said the company, with about 60 percent of Nigeria's sports betting wagering market, had an extensive network. Nigerian wagering shops often function as social hubs where customers can watch 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 final warm up game before the World Cup.

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

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