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By Alexis Akwagyiram and Didi Akinyelure

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

For many years, mobile payments stopped working to take off 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 slow web speeds have held Nigerian online consumers back but wagering companies says the new, quick digital payment systems underpinning their websites are changing mindsets towards online deals.

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

"The operators will choose whoever is quicker, whoever can link to their platform with less problems and problems," 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 an increase 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 an overall 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 almost 10 million worth 61 billion.

With a young population of nearly 190 million, increasing cellphone usage and falling data costs, Nigeria has long been seen as an excellent chance for online companies - once consumers feel comfy with electronic payments.

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

British online sports betting company Betway opened its very first African business 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 development in the variety of fintechs, and the federal government as an enabler, has actually helped business to grow. These technological shifts motivated Betway to start operating in Nigeria," he stated.

FINTECH COMPETITION

sports betting firms cashing in on the soccer craze whipped up by Nigeria's participation in the World Cup state they are finding the payment systems created by local startups such as Paystack are proving popular online.

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

"We included Paystack as one of our payment choices with no fanfare, without revealing to our consumers, and within a month it shot up to the primary most secondhand payment choice on the site," said Akin Alabi, founder of NairabBET.

He stated NairaBET, the nation's second most significant sports betting company, now had 2 million routine clients on its site, up from 500,000 in 2013, and Paystack stayed the most popular payment option considering that it was included in late 2017.

Paystack was established by 2 Nigerian computer 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 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 regular 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 each and every single month," said Emmanuel Quartey, Paystack's head of growth.

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

Paystack said it makes it possible for payments for a number of sports betting firms however also a broad 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 programme along with endeavor 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 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 service is more developed.

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

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

But regardless of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was crucial to have a shop network, not least due to the fact that many clients still remain unwilling to invest online.

He stated the business, with about 60 percent of Nigeria's sports betting wagering market, had an extensive network. Nigerian wagering act as social centers where customers can enjoy soccer free of charge while placing bets.

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

Richard Onuka, a factory employee who makes 25,000 naira a month, was focused on a TV screen inside. He said he began sports betting 3 months earlier and bets approximately 1,000 naira a day.

"Since I have actually been playing I have actually not won anything but I think that one day I will win," said Onuka. ($1 = 314.5000 naira) (Reporting by Alexis Akwagyiram and Didi Akinyelure in Lagos; modifying by David Clarke)