By Alexis Akwagyiram and Didi Akinyelure

LAGOS, June 25 (Reuters) - Online sports betting is booming in soccer-mad Nigeria largely thanks to payment systems established by homegrown technology 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 actually cultivated a culture of cashless payments.

Fear of electronic fraud and slow internet speeds have held Nigerian online consumers back however wagering companies states the new, fast digital payment systems underpinning their websites are changing mindsets towards online transactions.

"We have actually seen substantial growth in the variety of payment options that are available. All that is certainly changing the gaming area," said Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria's industrial capital.

"The operators will go with whoever is much faster, whoever can connect to their platform with less concerns and problems," he stated, including 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 nearly 10 million worth 61 billion.

With a young population of almost 190 million, increasing mobile phone usage and falling data costs, Nigeria has actually long been seen as a fantastic chance for online businesses - once consumers feel comfy 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 an obstacle for pure online merchants.

British online wagering firm Betway opened its very first African company in Kenya in 2015, followed by Uganda, Ghana and South Africa. It released 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 assisted business to flourish. These technological shifts motivated Betway to start running in Nigeria," he stated.

FINTECH COMPETITION

sports betting companies cashing in on the soccer craze worked up by Nigeria's involvement worldwide Cup state they are finding the payment systems produced by local startups such as Paystack are showing popular online.

Paystack and another regional 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 organizations operating in Nigeria.

"We added Paystack as one of our payment choices with no fanfare, without revealing to our clients, and within a month it soared to the top most pre-owned payment choice on the site," stated Akin Alabi, founder of NairabBET.

He stated NairaBET, the country's second greatest wagering company, now had 2 million regular customers on its site, up from 500,000 in 2013, and Paystack stayed the most popular payment choice since it was included in late 2017.

Paystack was established by two Nigerian computer system science graduates, Shola Akinlade and Ezra Olubi, who received early phase financing 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 mad Ikeja district of Lagos, said the number of regular monthly 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 every month," said Emmanuel Quartey, Paystack's head of growth.

He said an environment of designers had emerged around Paystack, creating software to incorporate the platform into websites. "We have seen a growth because neighborhood and they have brought us along," said Quartey.

Paystack stated it enables payments for a number of sports betting companies however likewise a large range of businesses, from energy services to transport business to insurance provider Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator program as well as venture 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 corresponded with the arrival of foreign investors hoping to use sports betting.

Industry specialists say 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 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 firm launched in 2015.

NairaBET's Alabi said its sales were divided between stores and online but the ease of electronic payments, expense of running shops and ability for clients to avoid the preconception of sports betting in public implied 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 due to the fact that many clients still stay unwilling to spend online.

He said the business, with about 60 percent of Nigeria's sports betting market, had a comprehensive network. Nigerian wagering shops typically serve as social centers where customers can view soccer totally free of charge while positioning bets.

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

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

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