By Alexis Akwagyiram and Didi Akinyelure

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

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 fraud and slow web speeds have held Nigerian online consumers back but wagering firms states the new, fast digital payment systems underpinning their sites are altering mindsets towards online transactions.

"We have actually seen significant growth in the variety of payment solutions that are readily available. All that is certainly changing the gaming space," stated Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria's business capital.

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

That growth has actually 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 certified 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 almost 10 million worth 61 billion.

With a young population of nearly 190 million, rising cellphone use and falling information costs, Nigeria has actually long been viewed as a great opportunity for online services - once customers feel comfy with electronic payments.

Online gambling companies say that is occurring, though reaching the tens of countless Nigerians without access to banking services stays a difficulty for pure online sellers.

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 supervisor Lere Awokoya stated.

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

FINTECH COMPETITION

sports betting firms capitalizing the soccer craze worked up by Nigeria's involvement worldwide Cup say they are finding the payment systems developed by local startups such as Paystack are showing popular online.

Paystack and another local startup Flutterwave, both founded in 2016, are providing competition for Nigeria's Interswitch which was established in 2002 and was the main platform used by businesses running in Nigeria.

"We included Paystack as one of our payment alternatives without any fanfare, without announcing to our clients, and within a month it soared to the primary most secondhand payment choice on the website," stated Akin Alabi, creator of NairabBET.

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

Paystack was established by 2 Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who got early stage funding in Silicon Valley's Y-Combinator program.

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 frenetic Ikeja district of Lagos, stated the variety of month-to-month deals it processed rose from about 8,000 in early 2016 to more than 900,000 as of 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 development.

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

Paystack stated it enables payments for a number of wagering companies but also a wide variety of organizations, from energy services to carry companies to insurance company Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator program along with endeavor capitalists 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 actually coincided with the arrival of foreign investors wanting to take advantage of sports betting wagering.

Industry specialists say the sector generates about $1 billion a year and is likely to grow faster than in South Africa and Kenya where business 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 trend, taking a half stake in market leader Bet9ja when the Nigerian firm released in 2015.

NairaBET's Alabi said its sales were split in between stores and online but the ease of electronic payments, expense of running shops and capability for customers to prevent the stigma of sports betting in public meant online deals would grow.

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

He stated the company, with about 60 percent of Nigeria's sports betting market, had an extensive network. Nigerian wagering shops frequently function as social hubs where consumers can see soccer totally free of charge while putting bets.

At a BetKing hall deep inside the bustling Oshodi market in Lagos, dozens of soccer fans collected to enjoy Nigeria's last heat up 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 stated he began gambling three months ago and bets up to 1,000 naira a day.

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