By Alexis Akwagyiram and Didi Akinyelure

LAGOS, June 25 (Reuters) - Online sports betting is booming in soccer-mad Nigeria largely thanks to payment systems established by homegrown technology firms that are starting to make online companies more viable.

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

Fear of electronic scams and sluggish internet speeds have actually held Nigerian online consumers back but sports betting companies states the brand-new, quick digital payment systems underpinning their websites are changing mindsets towards online deals.

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

"The operators will opt for whoever is quicker, whoever can connect to their platform with less concerns and glitches," he stated, adding that taxes from sports betting in Lagos State increased 30 percent to 40 percent in 2017 from 2016.

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

With a young population of nearly 190 million, increasing smart phone use and falling information costs, Nigeria has long been seen as a great chance for online services - once customers feel comfortable with electronic payments.

Online sports betting firms say that is taking place, though reaching the tens of millions of Nigerians without access to banking services stays a difficulty for pure online retailers.

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

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

"The development in the variety of fintechs, and the federal government as an enabler, has assisted business to flourish. These technological shifts motivated Betway to begin running in Nigeria," he stated.

FINTECH COMPETITION

sports betting companies capitalizing the soccer frenzy worked up by Nigeria's participation worldwide Cup state they are finding the payment systems produced by regional startups such as Paystack are showing popular online.

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

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

He stated NairaBET, the nation's second greatest sports betting firm, now had 2 million regular customers on its site, up from 500,000 in 2013, and Paystack remained the most popular payment choice considering that it was included late 2017.

Paystack was established by two Nigerian computer system science graduates, Shola Akinlade and Ezra Olubi, who received early stage financing in Silicon Valley's Y-Combinator program.

In December 2016, it raised $1.3 million from investors 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 as of June 2018.

"In early 2016 we were processing about $3,000 a month. Today we process well over $11 million each and every single month," stated Emmanuel Quartey, Paystack's head of growth.

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

Paystack stated it enables payments for a variety of sports betting firms but likewise a wide variety of companies, from energy services to carry 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 venture capitalists 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 coincided with the arrival of foreign investors hoping to tap into sports betting wagering.

Industry experts state the sector generates about $1 billion a year and is likely to grow faster than in South Africa and Kenya where the company 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 was ahead of the trend, taking a 50 percent stake in market leader Bet9ja when the Nigerian company released in 2015.

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

But despite advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was necessary to have a store network, not least since lots of customers still remain unwilling to spend online.

He said the business, with about 60 percent of Nigeria's sports betting market, had an extensive network. Nigerian sports betting shops often serve as social hubs where clients can enjoy soccer totally free of charge while placing bets.

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

Richard Onuka, a factory worker who makes 25,000 naira a month, was fixated on a TV screen inside. He said he started sports betting 3 months ago and bets approximately 1,000 naira a day.

"Since I have been playing I have not won anything but I believe 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)