By Alexis Akwagyiram and Didi Akinyelure

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

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

Fear of electronic fraud and sluggish internet speeds have held Nigerian online consumers back but sports betting firms states the new, quick digital payment systems underpinning their websites are changing attitudes towards online transactions.

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

"The operators will choose whoever is faster, whoever can link to their platform with less concerns and problems," he stated, adding that taxes from sports betting wagering in Lagos State increased 30 percent to 40 percent in 2017 from 2016.

That growth has been matched by an increase in web payments, according to information 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 an overall 132 billion naira ($420 million). Transactions leapt 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 nearly 190 million, rising mobile phone use and falling data expenses, Nigeria has actually long been viewed as a fantastic chance for online businesses - once customers 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 remains a challenge for pure online sellers.

British online sports betting firm Betway opened its first African company 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 federal government as an enabler, has helped the company to prosper. These technological shifts encouraged Betway to begin running in Nigeria," he stated.

FINTECH COMPETITION

sports betting firms cashing in on the soccer craze worked up by Nigeria's participation in the World Cup say they are finding the payment systems produced by regional start-ups such as Paystack are showing popular online.

Paystack and another regional start-up Flutterwave, both founded in 2016, are supplying competitors for Nigeria's Interswitch which was set up in 2002 and was the main platform used by organizations operating in Nigeria.

"We included Paystack as one of our payment alternatives with no fanfare, without announcing to our customers, and within a month it shot up to the number one most secondhand payment choice on the website," said Akin Alabi, founder of NairabBET.

He stated NairaBET, the country's second greatest sports betting company, now had 2 million regular customers on its website, up from 500,000 in 2013, and Paystack remained the most popular payment option given that it was included late 2017.

Paystack was set up by 2 Nigerian computer system science graduates, Shola Akinlade and Ezra Olubi, who received 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 regular 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 month," said Emmanuel Quartey, Paystack's head of development.

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

Paystack said it enables payments for a variety of sports betting companies but likewise a wide variety of businesses, from energy services to transfer business to insurance provider Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is also backed by the Y-Combinator programme 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 accompanied the arrival of foreign financiers wishing to use sports betting wagering.

Industry professionals state the sector produces 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 two 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 split between stores and online but the ease of electronic payments, expense of running shops and ability for clients to avoid the preconception of gambling in public meant online deals would grow.

But in spite of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was very important to have a shop network, not least since many customers still remain hesitant to invest online.

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

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

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

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