By Alexis Akwagyiram and Didi Akinyelure

LAGOS, June 25 (Reuters) - Online sports betting is expanding in soccer-mad Nigeria mostly thanks to payment systems developed by homegrown technology companies that are starting 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 money transfers have fostered a culture of cashless payments.

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

"We have seen considerable development in the number of payment solutions that are available. All that is definitely altering the gaming area," stated Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria's industrial capital.

"The operators will choose whoever is much faster, whoever can link to their platform with less issues and problems," he stated, adding 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 an increase in web payments, according to data from the Nigeria Inter-Bank Settlement System (NIBSS), which is owned by the reserve 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 first quarter of 2018 there were nearly 10 million worth 61 billion.

With a young population of almost 190 million, increasing cellphone use and falling data costs, Nigeria has long been seen as an excellent chance for online businesses - once customers feel comfortable with electronic payments.

Online sports betting companies state that is happening, though reaching the 10s of countless Nigerians without access to banking services remains a challenge for pure online sellers.

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

"There is a gradual 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 federal government as an enabler, has actually assisted the company to thrive. These technological shifts motivated 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 finding the payment systems created by regional start-ups such as Paystack are proving popular online.

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

"We added Paystack as one of our payment alternatives without any excitement, without revealing to our customers, and within a month it soared to the primary most secondhand payment option on the site," stated Akin Alabi, founder of NairabBET.

He stated NairaBET, the country's second biggest wagering company, now had 2 million regular consumers on its website, up from 500,000 in 2013, and Paystack stayed the most popular payment option because it was included late 2017.

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

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 frenetic Ikeja district of Lagos, said 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 development.

He said a community of developers had actually emerged around Paystack, producing software to incorporate the platform into sites. "We have actually seen a growth in that neighborhood and they have brought us along," stated Quartey.

Paystack stated it allows payments for a number of sports betting companies but also a large range of services, from utility services to transport companies to insurance provider Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator program as well as 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 accompanied the arrival of foreign investors hoping to use sports betting wagering.

Industry professionals say the sector generates about $1 billion a year and is most likely to grow faster than in South Africa and Kenya where business is more established.

Russia's 1XBet and Slovakia's DOXXbet have both set up in Nigeria in the last two years while Italy's Goldbet was ahead of the pattern, taking a half stake in market leader Bet9ja when the Nigerian firm launched in 2015.

NairaBET's Alabi said its sales were divided between shops and online but the ease of electronic payments, cost of running shops and ability for consumers to prevent 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 necessary to have a store network, not least since many customers still stay hesitant to spend online.

He said the business, with about 60 percent of Nigeria's sports betting market, had an extensive network. Nigerian wagering stores often function as social centers where customers can view soccer complimentary of charge while positioning bets.

At a BetKing hall deep inside the dynamic Oshodi market in Lagos, dozens of soccer fans gathered to view 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 sports betting 3 months back and bets up to 1,000 naira a day.

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