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 organizations more feasible.

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

Fear of electronic fraud and sluggish internet speeds have held Nigerian online consumers back however sports betting companies states the brand-new, fast digital payment systems underpinning their sites are altering mindsets towards online transactions.

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

"The operators will opt for whoever is faster, whoever can connect to their platform with less issues and problems," he said, including that taxes from sports betting wagering in Lagos State increased 30 percent to 40 percent in 2017 from 2016.

That development 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 main 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 almost 10 million worth 61 billion.

With a young population of nearly 190 million, increasing mobile phone usage and falling data costs, Nigeria has actually long been seen as a great chance for online organizations - once customers feel comfy with electronic payments.

Online gambling firms state that is taking place, though reaching the 10s of millions of Nigerians without access to banking services remains a challenge for pure online merchants.

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

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

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

FINTECH COMPETITION

sports betting companies capitalizing the soccer frenzy whipped up by Nigeria's involvement worldwide Cup say they are discovering the payment systems created by local startups such as Paystack are showing popular online.

Paystack and another regional startup Flutterwave, both founded in 2016, are offering competition for Nigeria's Interswitch which was set up in 2002 and was the primary platform used by companies operating in Nigeria.

"We added Paystack as one of our payment options without any excitement, without revealing to our customers, and within a month it shot up to the top most secondhand payment option on the website," stated Akin Alabi, founder of NairabBET.

He stated NairaBET, the nation's 2nd biggest sports betting company, now had 2 million regular clients on its site, up from 500,000 in 2013, and Paystack remained the most popular payment alternative because it was added in late 2017.

Paystack was set up 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, stated the number of month-to-month deals 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 single month," said Emmanuel Quartey, Paystack's head of development.

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

Paystack said it allows payments for a variety of wagering companies but also a large variety of organizations, from energy services to transfer business to insurer Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur 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 last year.

FOREIGN INVESTMENT

Shifts in Nigeria's payment culture have actually coincided with the arrival of foreign financiers wanting to take advantage of sports betting wagering.

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 established.

Russia's 1XBet and Slovakia's DOXXbet have actually both set up in Nigeria in the last 2 years while Italy's Goldbet led the trend, taking a 50 percent stake in market leader Bet9ja when the Nigerian firm introduced in 2015.

NairaBET's Alabi said its sales were divided between stores and online however the ease of electronic payments, cost of running shops and capability for clients to prevent the preconception of gaming in public implied online transactions 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 because many consumers still remain unwilling to spend online.

He stated the company, with about 60 percent of Nigeria's sports betting market, had an extensive network. Nigerian sports betting shops often function as social centers where customers can view soccer totally free of charge while placing bets.

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

Richard Onuka, a factory worker who earns 25,000 naira a month, was focused on a television screen inside. He said he began sports betting three months earlier and bets approximately 1,000 naira a day.

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