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 innovation companies that are beginning to make online businesses more viable.

For several years, mobile payments stopped working 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 scams and slow internet speeds have actually held Nigerian online customers back however sports betting firms says the new, quick digital payment systems underpinning their websites are altering mindsets towards online deals.

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

"The operators will choose whoever is quicker, whoever can link to their platform with less problems and problems," he said, adding that taxes from sports betting in Lagos State increased 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 main bank and certified banks.

In 2016, there were 14 million web payments worth an overall 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 nearly 190 million, increasing mobile phone usage and falling data expenses, Nigeria has actually long been viewed as a fantastic chance for online companies - once consumers feel comfy with electronic payments.

Online sports betting companies say that is occurring, though reaching the 10s of millions of Nigerians without access to banking services stays a difficulty 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 steady shift to online now, that is where the industry is going," Betway's Nigeria manager Lere Awokoya stated.

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

FINTECH COMPETITION

sports betting firms cashing in on the soccer frenzy whipped up by Nigeria's participation worldwide Cup say they are discovering the payment systems developed by regional startups such as Paystack are proving popular online.

Paystack and another regional startup Flutterwave, both established in 2016, are offering competitors for Nigeria's Interswitch which was set up in 2002 and was the primary platform utilized by organizations running in Nigeria.

"We added Paystack as one of our payment options with no excitement, without revealing to our clients, and within a month it soared to the primary most pre-owned payment choice on the website," stated Akin Alabi, creator of NairabBET.

He stated NairaBET, the country's second most significant sports betting company, now had 2 million routine clients on its site, up from 500,000 in 2013, and Paystack remained the most popular payment alternative because it was included late 2017.

Paystack was set up 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 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 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 single month," said Emmanuel Quartey, Paystack's head of growth.

He stated an ecosystem of developers had emerged around Paystack, producing software to incorporate the platform into sites. "We have seen a growth because community and they have actually carried us along," said Quartey.

Paystack stated it allows payments for a number of sports betting companies however likewise a wide variety of companies, from energy services to transfer companies to insurer Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator program 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 intending to tap into sports betting wagering.

Industry professionals state the sector generates about $1 billion a year and is most likely to grow faster than in South Africa and Kenya where the business is more developed.

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 firm released in 2015.

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

But in spite of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was very important to have a shop network, not least because numerous clients 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 often serve as social hubs where clients can watch soccer totally free of charge while putting bets.

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

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

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