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

For many years, mobile payments stopped working to remove in Nigeria as they have in nations such as Kenya, where Safaricom's M-Pesa money transfers have fostered a culture of cashless payments.

Fear of electronic scams and slow web speeds have held Nigerian online customers back however wagering firms states the brand-new, quick digital payment systems underpinning their sites are changing mindsets towards online transactions.

"We have actually seen considerable development in the variety of payment options that are available. All that is definitely altering the video gaming area," stated Seun Anibaba, CEO of Lagos State Lotteries Board, gaming regulator in Nigeria's commercial capital.

"The operators will choose whoever is quicker, whoever can link to their platform with less concerns and problems," he said, adding that taxes from sports betting in Lagos State increased 30 percent to 40 percent in 2017 from 2016.

That development has been matched by a rise in web payments, according to data from the Nigeria Inter-Bank Settlement System (NIBSS), which is owned by the reserve bank and licensed 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 almost 10 million worth 61 billion.

With a young population of almost 190 million, increasing smart phone usage and falling information expenses, Nigeria has actually long been seen as an excellent opportunity for online services - once consumers feel comfy with electronic payments.

Online gaming companies state that is taking place, 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 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 number of fintechs, and the federal government as an enabler, has assisted the business to grow. These technological shifts encouraged Betway to begin operating in Nigeria," he stated.

FINTECH COMPETITION

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

Paystack and another local startup Flutterwave, both established in 2016, are supplying competition for Nigeria's Interswitch which was established in 2002 and was the main platform used by services operating in Nigeria.

"We included Paystack as one of our payment alternatives without any fanfare, without announcing to our customers, and within a month it shot up to the top most used payment choice on the site," said Akin Alabi, creator of NairabBET.

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

Paystack was set up by two Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who got early stage financing in Silicon Valley's Y-Combinator program.

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 mad Ikeja district of Lagos, said the variety of month-to-month 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 month," stated Emmanuel Quartey, Paystack's head of growth.

He said an ecosystem of designers had emerged around Paystack, creating software application to integrate the platform into websites. "We have actually seen a growth because community and they have brought us along," stated Quartey.

Paystack stated it enables payments for a number of sports betting companies but also a broad variety of companies, from utility services to carry business to insurance company Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator programme in addition to 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 actually coincided with the arrival of foreign investors wishing to tap into sports betting wagering.

Industry professionals state the sector creates 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 both set up in Nigeria in the last two years while Italy's Goldbet led the trend, taking a 50 percent stake in market leader Bet9ja when the Nigerian firm released in 2015.

NairaBET's Alabi stated its sales were split between stores and online but the ease of electronic payments, expense of running stores and capability for customers to avoid the preconception of sports betting in public suggested online deals would grow.

But regardless of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was crucial to have a shop network, not least since many customers still stay hesitant to spend online.

He stated the business, with about 60 percent of Nigeria's sports betting market, had a comprehensive network. Nigerian wagering shops often serve as social hubs where consumers can watch soccer free of charge while positioning bets.

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

Richard Onuka, a factory worker who makes 25,000 naira a month, was focused on a TV screen inside. He stated he started sports betting 3 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 one day I will win," said Onuka. ($1 = 314.5000 naira) (Reporting by Alexis Akwagyiram and Didi Akinyelure in Lagos; editing by David Clarke)