By Alexis Akwagyiram and Didi Akinyelure

LAGOS, June 25 (Reuters) - Online sports betting wagering is expanding in soccer-mad Nigeria mostly thanks to payment systems established by homegrown innovation firms that are beginning to make online organizations more feasible.

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

Fear of electronic fraud and slow web speeds have held Nigerian online consumers back but sports betting firms says the brand-new, quick digital payment systems underpinning their sites are changing attitudes towards online transactions.

"We have seen significant development in the variety of payment services 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 industrial capital.

"The operators will opt for whoever is quicker, whoever can link to their platform with less issues and glitches," he stated, adding that taxes from sports betting wagering 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 main bank and certified 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 first quarter of 2018 there were almost 10 million worth 61 billion.

With a young population of almost 190 million, increasing smart phone use and falling data expenses, Nigeria has long been viewed as a great opportunity for online organizations - once consumers feel comfortable with electronic payments.

Online gaming companies state that is happening, though reaching the tens of countless Nigerians without access to banking services stays a challenge for pure online merchants.

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

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

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

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 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 services running in Nigeria.

"We added Paystack as one of our payment alternatives with no fanfare, without revealing to our customers, and within a month it shot up to the primary most used payment choice on the site," stated Akin Alabi, creator of NairabBET.

He said NairaBET, the country's 2nd most significant sports betting firm, now had 2 million regular customers on its website, up from 500,000 in 2013, and Paystack remained the most popular payment option given that it was included late 2017.

Paystack was established by 2 Nigerian computer system science graduates, Shola Akinlade and Ezra Olubi, who received early stage financing in Silicon Valley's Y-Combinator programme.

In December 2016, it raised $1.3 million from financiers 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 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 every single month," said Emmanuel Quartey, Paystack's head of growth.

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

Paystack said it enables payments for a number of wagering firms however likewise a large range of organizations, from utility services to transport business to insurance company Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator program 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 accompanied the arrival of foreign investors wanting to take advantage of sports betting.

Industry experts state the sector produces 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 established in Nigeria in the last two years while Italy's Goldbet was ahead of the pattern, taking a 50 percent stake in market leader Bet9ja when the Nigerian company released in 2015.

NairaBET's Alabi stated its sales were divided between stores and online but the ease of electronic payments, cost of running shops and ability for clients to avoid the stigma of gambling in public indicated online deals would grow.

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

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

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

Richard Onuka, a factory worker who earns 25,000 naira a month, was fixated on a TV screen inside. He said he began gambling three months back and bets up to 1,000 naira a day.

"Since I have 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; modifying by David Clarke)