By Alexis Akwagyiram and Didi Akinyelure

LAGOS, June 25 (Reuters) - Online sports betting wagering is flourishing in soccer-mad Nigeria mainly thanks to payment systems developed by homegrown technology firms that are starting to make online organizations more feasible.

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

Fear of electronic fraud and slow internet speeds have held Nigerian online customers back however sports betting firms states the brand-new, quick digital payment systems underpinning their websites are changing mindsets towards online deals.

"We have actually seen significant growth in the variety of payment services that are available. All that is definitely altering the gaming space," said Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria's business capital.

"The operators will opt for whoever is quicker, whoever can link to their platform with less issues 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 data from the Nigeria Inter-Bank Settlement System (NIBSS), which is owned by the central bank and licensed 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 nearly 10 million worth 61 billion.

With a young population of almost 190 million, increasing cellphone usage and falling information expenses, Nigeria has long been seen as a terrific chance for online services - once customers feel comfy with electronic payments.

Online gaming companies say that is happening, though reaching the 10s of countless Nigerians without access to banking services remains a challenge for pure online merchants.

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

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

"The development in the variety of fintechs, and the government as an enabler, has helped the company to prosper. These technological shifts motivated Betway to begin operating in Nigeria," he said.

FINTECH COMPETITION

sports betting firms capitalizing the soccer craze worked up by Nigeria's participation on the planet Cup state they are discovering the payment systems produced by local startups such as Paystack are showing popular online.

Paystack and another regional start-up Flutterwave, both established in 2016, are providing competition for Nigeria's Interswitch which was established in 2002 and was the main platform utilized by companies running in Nigeria.

"We included Paystack as one of our payment choices with no excitement, without announcing to our consumers, and within a month it shot up to the number one most pre-owned payment option on the site," stated Akin Alabi, founder of NairabBET.

He stated NairaBET, the country's second greatest wagering company, now had 2 million routine clients on its website, up from 500,000 in 2013, and Paystack remained the most popular payment option considering 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 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 frenetic Ikeja district of Lagos, said the variety of month-to-month 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 single month," said Emmanuel Quartey, Paystack's head of growth.

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

Paystack said it makes it possible for payments for a number of sports betting firms but likewise a large range of services, from utility services to transfer business to insurance company Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator programme along with endeavor capitalists 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 corresponded with the arrival of foreign financiers hoping to take advantage of sports betting.

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

Russia's 1XBet and Slovakia's DOXXbet have actually both established in Nigeria in the last 2 years while Italy's Goldbet was ahead of the trend, taking a half stake in market leader Bet9ja when the Nigerian company released in 2015.

NairaBET's Alabi stated its sales were split between shops and online but the ease of electronic payments, cost of running stores and ability for consumers to prevent 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 crucial to have a shop network, not least because lots of clients still remain hesitant to spend online.

He stated the business, with about 60 percent of Nigeria's sports betting market, had a comprehensive network. Nigerian wagering stores typically act as social hubs where consumers can view soccer complimentary of charge while positioning bets.

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

Richard Onuka, a factory worker who earns 25,000 naira a month, was fixated on a TV screen inside. He said he began sports betting 3 months back and bets up to 1,000 naira a day.

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