By Alexis Akwagyiram and Didi Akinyelure

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

For years, mobile payments failed to take off in Nigeria as they have in nations such as Kenya, where Safaricom's M-Pesa money transfers have promoted a culture of cashless payments.

Fear of electronic fraud and slow web speeds have actually held Nigerian online consumers back however sports betting companies states the new, quick digital payment systems underpinning their sites are changing attitudes towards online transactions.

"We have seen significant development in the number of payment services that are offered. All that is definitely altering the gaming space," stated Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria's business capital.

"The operators will go with whoever is quicker, whoever can link to their platform with less concerns 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 main 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 very first quarter of 2018 there were nearly 10 million worth 61 billion.

With a young population of nearly 190 million, rising cellphone use and falling information expenses, Nigeria has long been viewed as a fantastic opportunity for online organizations - once consumers feel comfy with electronic payments.

Online gambling firms state that is occurring, though reaching the tens of millions of Nigerians without access to banking services remains a difficulty for pure online retailers.

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

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

"The development in the variety of fintechs, and the federal government as an enabler, has helped the organization to flourish. These technological shifts encouraged Betway to start running in Nigeria," he said.

FINTECH COMPETITION

sports betting firms cashing in on the soccer frenzy worked up by Nigeria's participation on the planet Cup state they are discovering the payment systems produced by regional start-ups such as Paystack are proving popular online.

Paystack and another local start-up Flutterwave, both founded in 2016, are supplying competitors for Nigeria's Interswitch which was established in 2002 and was the primary platform utilized by businesses operating in Nigeria.

"We added Paystack as one of our payment options with no fanfare, without announcing to our consumers, and within a month it shot up to the primary most pre-owned payment choice on the website," stated Akin Alabi, founder of NairabBET.

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

Paystack was set up by two Nigerian computer system science graduates, Shola Akinlade and Ezra Olubi, who received early phase financing in Silicon Valley's Y-Combinator programme.

In December 2016, it raised $1.3 million from financiers including China's Tencent and Comcast Ventures in the United States.

Paystack, based in the frenetic Ikeja district of Lagos, said the number of regular monthly 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 ecosystem of designers had actually emerged around Paystack, creating software application to incorporate the platform into sites. "We have seen a growth because neighborhood and they have actually carried us along," stated Quartey.

Paystack said it makes it possible for payments for a variety of wagering companies but also a large range of businesses, from energy services to transport companies to insurer Axa Mansard.

Flutterwave, co-founded by Nigerian business owner 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 accompanied the arrival of foreign investors hoping 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 both established in Nigeria in the last two years while Italy's Goldbet led the trend, taking a half stake in market leader Bet9ja when the Nigerian firm introduced in 2015.

NairaBET's Alabi stated its sales were split in between stores and online but the ease of electronic payments, expense of running shops and ability for clients to prevent the stigma of gaming in public implied 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 store network, not least since many clients still stay unwilling to spend online.

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

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

Richard Onuka, a factory employee who makes 25,000 naira a month, was fixated on a television screen inside. He stated he started sports betting three months ago and bets up to 1,000 naira a day.

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