By Alexis Akwagyiram and Didi Akinyelure

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

For several years, mobile payments failed to remove in Nigeria as they have in countries such as Kenya, where Safaricom's M-Pesa cash transfers have actually promoted a culture of cashless payments.

Fear of electronic fraud and sluggish internet speeds have held Nigerian online customers back however wagering firms states the new, fast digital payment systems underpinning their sites are altering attitudes towards online transactions.

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

"The operators will choose whoever is faster, whoever can link to their platform with less problems and problems," he stated, including that taxes from sports betting wagering in Lagos State rose 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 reserve 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 very first quarter of 2018 there were nearly 10 million worth 61 billion.

With a young population of almost 190 million, rising smart phone use and falling information costs, Nigeria has actually long been viewed as a terrific opportunity for online companies - once customers feel comfortable with electronic payments.

Online sports betting companies state that is happening, though reaching the tens of countless Nigerians without access to banking services remains an obstacle for pure online retailers.

British online wagering company Betway opened its first African organization in Kenya in 2015, followed by Uganda, Ghana and South Africa. It launched 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 number of fintechs, and the government as an enabler, has actually helped business to flourish. 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 participation worldwide Cup say they are discovering the payment systems produced by local startups such as Paystack are showing popular online.

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

"We included Paystack as one of our payment options with no excitement, without revealing to our clients, and within a month it shot up to the primary most pre-owned payment option on the website," said Akin Alabi, creator of NairabBET.

He stated NairaBET, the country's 2nd greatest wagering firm, now had 2 million routine clients on its site, up from 500,000 in 2013, and Paystack remained the most popular payment choice since 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 including China's Tencent and Comcast Ventures in the United States.

Paystack, based in the frenetic Ikeja district of Lagos, stated the number of month-to-month transactions it processed increased 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 growth.

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

Paystack stated it makes it possible for payments for a number of sports betting firms however likewise a vast array of businesses, from utility services to transport business to insurer Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator programme along with venture 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 corresponded with the arrival of foreign financiers wanting to tap into sports betting.

Industry specialists state the sector generates about $1 billion a year and is most likely to grow faster than in South Africa and Kenya where the service 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 was ahead of the pattern, taking a half stake in market leader Bet9ja when the Nigerian company released in 2015.

NairaBET's Alabi said its sales were split between shops and online however the ease of electronic payments, cost of running stores and capability for clients to avoid the stigma of gaming in public meant online transactions would grow.

But despite advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was necessary to have a shop network, not least due to the fact that lots of customers still remain unwilling to spend online.

He said the company, with about 60 percent of Nigeria's sports betting wagering market, had a comprehensive network. Nigerian sports betting stores frequently act as social hubs where clients can watch soccer totally free of charge while putting bets.

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

Richard Onuka, a factory worker who earns 25,000 naira a month, was focused on a television screen inside. He said he started gambling three months back and bets up to 1,000 naira a day.

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