By Alexis Akwagyiram and Didi Akinyelure

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

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

Fear of electronic scams and sluggish internet speeds have held Nigerian online customers back but wagering firms states the brand-new, fast digital payment systems underpinning their sites are changing attitudes towards online deals.

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

"The operators will choose whoever is much faster, whoever can connect to their platform with less issues 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 a rise in web payments, according to data from the Nigeria Inter-Bank Settlement System (NIBSS), which is owned by the central bank and licensed banks.

In 2016, there were 14 million web payments worth a total 132 billion naira ($420 million). Transactions leapt 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 usage and falling information expenses, Nigeria has long been seen as an excellent chance for online services - once consumers feel comfy with electronic payments.

Online gambling firms say that is occurring, though reaching the 10s of millions of Nigerians without access to banking services stays a challenge for pure online sellers.

British online sports betting firm Betway opened its very 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 market is going," Betway's Nigeria manager Lere Awokoya stated.

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

FINTECH COMPETITION

sports betting companies capitalizing the soccer craze worked up by Nigeria's involvement in the World Cup state they are discovering the payment systems produced by local start-ups such as Paystack are proving popular online.

Paystack and another local start-up Flutterwave, both established in 2016, are providing competitors for Nigeria's Interswitch which was set up in 2002 and was the main platform used by businesses operating in Nigeria.

"We added Paystack as one of our payment alternatives without any excitement, without announcing to our customers, and within a month it soared to the top most secondhand payment choice on the website," stated Akin Alabi, creator of NairabBET.

He stated NairaBET, the country's second greatest wagering firm, now had 2 million regular clients on its website, up from 500,000 in 2013, and Paystack stayed the most popular payment choice considering that it was added in late 2017.

Paystack was set up by 2 Nigerian computer technology 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 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 regular monthly transactions it processed increased 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," stated Emmanuel Quartey, Paystack's head of development.

He stated an environment of designers had actually emerged around Paystack, producing software to integrate the platform into websites. "We have seen a growth in that neighborhood and they have actually brought us along," stated Quartey.

Paystack stated it makes it possible for payments for a variety of sports betting companies however likewise a vast array of organizations, from utility services to transfer business to insurance provider Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator programme in addition to 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 coincided with the arrival of foreign financiers wishing to tap into sports betting.

Industry professionals state the sector creates about $1 billion a year and is 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 2 years while Italy's Goldbet was ahead of the trend, taking a 50 percent stake in market leader Bet9ja when the Nigerian firm launched in 2015.

NairaBET's Alabi said its sales were divided in between stores and online but the ease of electronic payments, cost of running stores and capability for consumers to prevent the stigma of sports betting in public meant online deals 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 shop network, not least because many customers still stay hesitant to invest online.

He said the business, with about 60 percent of Nigeria's sports betting wagering market, had an extensive network. Nigerian sports betting stores typically act as social hubs where customers can watch soccer totally free of charge while placing bets.

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

Richard Onuka, a factory employee who makes 25,000 naira a month, was focused on a television screen inside. He stated he began gambling 3 months ago and bets up to 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)