By Alexis Akwagyiram and Didi Akinyelure

LAGOS, June 25 (Reuters) - Online sports betting wagering is flourishing in soccer-mad Nigeria mainly thanks to payment systems developed by homegrown technology firms that are beginning to make online businesses more feasible.

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

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

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

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

That growth 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 reserve 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 nearly 10 million worth 61 billion.

With a young population of almost 190 million, rising smart phone usage and falling information costs, Nigeria has actually long been seen as a fantastic chance for online businesses - once consumers feel comfy with electronic payments.

Online gaming firms say that is taking place, though reaching the 10s of countless Nigerians without access to banking services remains a difficulty for pure online retailers.

British online sports betting firm Betway opened its first African company 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 manager Lere Awokoya stated.

"The development in the number of fintechs, and the federal government as an enabler, has helped the business to flourish. These technological shifts motivated Betway to begin operating in Nigeria," he said.

FINTECH COMPETITION

sports betting firms cashing in on the soccer frenzy whipped up by Nigeria's involvement worldwide Cup state they are discovering the payment systems developed by regional startups such as Paystack are proving popular online.

Paystack and another local startup Flutterwave, both established in 2016, are offering competition for Nigeria's Interswitch which was set up in 2002 and was the main platform used by businesses running in Nigeria.

"We added Paystack as one of our payment options without any fanfare, without revealing to our consumers, and within a month it shot up to the top most used payment alternative on the site," said Akin Alabi, founder of NairabBET.

He stated NairaBET, the country's second biggest sports betting firm, now had 2 million regular consumers on its site, up from 500,000 in 2013, and Paystack remained the most popular payment alternative 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 funding in Silicon Valley's Y-Combinator program.

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 frenetic Ikeja district of Lagos, said the variety of month-to-month deals 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 every month," stated Emmanuel Quartey, Paystack's head of development.

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

Paystack said it allows payments for a number of sports betting firms but likewise a wide variety of organizations, from utility services to transport business to insurance company Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is also backed by the Y-Combinator programme as well as 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 corresponded with the arrival of foreign investors hoping to use sports betting wagering.

Industry experts state 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 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 introduced in 2015.

NairaBET's Alabi stated its sales were split between shops and online but the ease of electronic payments, expense of running shops and ability for clients to avoid the stigma of gaming in public meant online transactions would grow.

But in spite of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was necessary to have a store network, not least since numerous clients still stay hesitant to spend online.

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

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

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

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