By Alexis Akwagyiram and Didi Akinyelure

LAGOS, June 25 (Reuters) - Online sports betting is growing in soccer-mad Nigeria mostly thanks to payment systems developed by homegrown technology companies that are beginning to make online services more practical.

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 actually fostered a culture of cashless payments.

Fear of electronic scams and sluggish internet speeds have held Nigerian online consumers back but sports betting companies says the new, fast digital payment systems underpinning their websites are changing attitudes towards online deals.

"We have seen significant growth in the number of payment solutions that are offered. All that is certainly altering the video gaming area," stated Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria's commercial capital.

"The operators will go with whoever is much faster, whoever can link to their platform with less problems and problems," he stated, including that taxes from sports betting in Lagos State rose 30 percent to 40 percent in 2017 from 2016.

That development has been matched by a rise in web payments, according to information from the Nigeria Inter-Bank Settlement System (NIBSS), which is owned by the central bank and certified 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 first quarter of 2018 there were almost 10 million worth 61 billion.

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

Online gambling companies state that is taking place, though reaching the tens of millions of Nigerians without access to banking services stays a challenge for pure online merchants.

British online sports betting firm Betway opened its very first African organization in Kenya in 2015, followed by Uganda, Ghana and South Africa. It released in Nigeria in January.

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

"The development in the number of fintechs, and the government as an enabler, has actually assisted business to grow. These technological shifts encouraged Betway to start running in Nigeria," he stated.

FINTECH COMPETITION

sports betting firms capitalizing the soccer frenzy worked up by Nigeria's participation in the World Cup state they are discovering the payment systems created by regional startups such as Paystack are proving popular online.

Paystack and another regional startup Flutterwave, both established in 2016, are supplying competitors for Nigeria's Interswitch which was established in 2002 and was the main platform used by organizations running in Nigeria.

"We added Paystack as one of our payment options without any fanfare, without announcing to our clients, and within a month it shot up to the primary most secondhand payment choice on the site," stated Akin Alabi, founder of NairabBET.

He stated NairaBET, the nation's 2nd biggest wagering firm, now had 2 million regular clients on its site, up from 500,000 in 2013, and Paystack remained the most popular payment choice since it was included in late 2017.

Paystack was established by two Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who received early stage 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 mad Ikeja district of Lagos, said the number of month-to-month transactions it processed increased 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 developers had actually emerged around Paystack, developing software application to incorporate the platform into sites. "We have seen a growth because community and they have carried us along," said Quartey.

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

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is also backed by the Y-Combinator programme in addition to venture 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 accompanied the arrival of foreign financiers intending to tap into sports betting.

Industry professionals say the sector creates 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 set up in Nigeria in the last 2 years while Italy's Goldbet was ahead of the pattern, taking a 50 percent stake in market leader Bet9ja when the Nigerian firm launched in 2015.

NairaBET's Alabi stated its sales were split in between shops and online but the ease of electronic payments, cost of running shops and ability for consumers to avoid the preconception of gambling in public meant online transactions would grow.

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

He said the business, with about 60 percent of Nigeria's sports betting wagering market, had an extensive network. Nigerian wagering shops typically serve as social hubs where customers can view soccer complimentary of charge while placing bets.

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

Richard Onuka, a factory employee who makes 25,000 naira a month, was focused on a television screen inside. He stated he started sports betting 3 months earlier and bets as much as 1,000 naira a day.

"Since I have actually been playing I have 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; editing by David Clarke)