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 viable.

For several 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 fostered a culture of cashless payments.

Fear of electronic fraud and slow internet speeds have actually held Nigerian online consumers back however wagering companies says the new, quick digital payment systems underpinning their websites are changing mindsets towards online deals.

"We have actually seen substantial development in the number of payment options that are readily available. All that is certainly changing the video gaming space," stated Seun Anibaba, CEO of Lagos State Lotteries Board, gaming regulator in Nigeria's commercial capital.

"The operators will go with whoever is faster, whoever can connect to their platform with less issues and glitches," 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 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 a total 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 almost 190 million, rising smart phone use and falling data costs, Nigeria has actually long been seen as a fantastic chance for online services - once customers feel comfy with electronic payments.

Online gaming firms state that is occurring, though reaching the tens of countless Nigerians without access to banking services stays an obstacle for pure online sellers.

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 manager Lere Awokoya stated.

"The growth in the variety of fintechs, and the federal government as an enabler, has actually assisted the company to prosper. These technological shifts motivated Betway to start operating in Nigeria," he said.

FINTECH COMPETITION

sports betting firms capitalizing the soccer craze worked up by Nigeria's participation on the planet Cup say they are finding the payment systems created by regional start-ups such as Paystack are proving popular online.

Paystack and another regional start-up Flutterwave, both founded in 2016, are offering competition for Nigeria's Interswitch which was set up in 2002 and was the main platform utilized by businesses operating in Nigeria.

"We added Paystack as one of our payment options with no excitement, without announcing to our clients, and within a month it soared to the primary most secondhand payment alternative on the site," stated Akin Alabi, creator of NairabBET.

He said NairaBET, the nation's 2nd greatest wagering company, now had 2 million routine clients on its website, up from 500,000 in 2013, and Paystack stayed the most popular payment option considering that it was added in late 2017.

Paystack was set up by 2 Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who got early stage 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 mad Ikeja district of Lagos, stated the number of monthly 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 month," said Emmanuel Quartey, Paystack's head of development.

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

Paystack said it enables payments for a variety of wagering companies but also a wide variety of businesses, from energy services to carry companies to insurance company Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator program as well as 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 actually corresponded with the arrival of foreign financiers intending to use sports betting.

Industry experts say the sector creates about $1 billion a year and is likely to grow faster than in South Africa and Kenya where the organization is more developed.

Russia's 1XBet and Slovakia's DOXXbet have actually 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 released in 2015.

NairaBET's Alabi said its sales were divided between shops and online however the ease of electronic payments, cost of running stores and capability for customers to avoid the stigma of sports betting in public meant online deals would grow.

But despite advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was necessary to have a shop network, not least because lots of customers still stay hesitant to spend online.

He stated the business, with about 60 percent of Nigeria's sports betting wagering market, had a comprehensive network. Nigerian sports betting stores often serve as social centers where clients can see soccer free of charge while placing bets.

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

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

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