By Alexis Akwagyiram and Didi Akinyelure

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

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

Fear of electronic fraud and slow web speeds have actually held Nigerian online customers back but sports betting firms states the new, quick digital payment systems underpinning their sites are changing mindsets towards online deals.

"We have actually seen considerable growth in the variety of payment services that are readily available. All that is absolutely altering the gaming area," stated Seun Anibaba, CEO of Lagos State Lotteries Board, gaming regulator in Nigeria's business capital.

"The operators will opt for whoever is much faster, whoever can connect to their platform with less concerns and glitches," he said, 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 an increase in web payments, according to data from the Nigeria Inter-Bank Settlement System (NIBSS), which is owned by the main 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 almost 10 million worth 61 billion.

With a young population of almost 190 million, increasing smart phone use and falling information costs, Nigeria has actually long been viewed as an excellent chance for online companies - once consumers feel comfy with electronic payments.

Online gambling firms say that is taking place, though reaching the tens of millions of Nigerians without access to banking services remains a challenge for pure online sellers.

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

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

"The development in the variety of fintechs, and the federal government as an enabler, has assisted the organization to thrive. These technological shifts encouraged Betway to start operating in Nigeria," he stated.

FINTECH COMPETITION

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

Paystack and another local start-up Flutterwave, both established in 2016, are supplying competition 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 announcing to our clients, and within a month it shot up to the primary most pre-owned payment choice on the site," said Akin Alabi, creator of NairabBET.

He said NairaBET, the country's second biggest wagering firm, now had 2 million regular customers on its site, up from 500,000 in 2013, and Paystack remained the most popular payment choice given that it was included late 2017.

Paystack was set up by 2 Nigerian computer technology 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, said the number of monthly transactions 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 single month," stated Emmanuel Quartey, Paystack's head of growth.

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

Paystack stated it makes it possible for payments for a variety of wagering companies however also a large range of services, from utility services to transport business to insurer Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is also backed by the Y-Combinator programme along with investor 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 actually corresponded with the arrival of foreign investors wanting to take advantage of sports betting wagering.

Industry specialists state the sector creates about $1 billion a year and is likely to grow faster than in South Africa and Kenya where the business is more established.

Russia's 1XBet and Slovakia's DOXXbet have actually both set up in Nigeria in the last 2 years while Italy's Goldbet led the pattern, taking a half stake in market leader Bet9ja when the Nigerian company released in 2015.

NairaBET's Alabi stated its sales were divided between stores and online but the ease of electronic payments, expense of running shops and capability for clients to avoid the stigma of gambling in public meant online transactions would grow.

But in spite of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was important to have a shop network, not least since numerous consumers still stay reluctant to spend online.

He stated the company, with about 60 percent of Nigeria's sports betting wagering market, had a comprehensive network. Nigerian sports betting stores often act as social centers where consumers can watch soccer complimentary of charge while placing bets.

At a BetKing hall deep inside the bustling Oshodi market in Lagos, lots of soccer fans gathered to view Nigeria's last warm 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 stated he began sports betting 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; editing by David Clarke)