By Alexis Akwagyiram and Didi Akinyelure

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

For many years, mobile payments stopped working to take off in Nigeria as they have in countries such as Kenya, where Safaricom's M-Pesa cash transfers have actually promoted a culture of cashless payments.

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

"We have seen substantial growth in the number of payment services that are offered. All that is absolutely altering the video gaming space," stated Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria's commercial capital.

"The operators will go with whoever is faster, whoever can link to their platform with less concerns and glitches," he stated, including that taxes from sports betting wagering in Lagos State increased 30 percent to 40 percent in 2017 from 2016.

That development has 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, increasing mobile phone use and falling data costs, Nigeria has actually long been seen as a terrific opportunity for online services - once customers feel comfortable with electronic payments.

Online sports betting companies state that is occurring, though reaching the tens of countless Nigerians without access to banking services remains a challenge for pure online retailers.

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

"There is a gradual shift to online now, that is where the industry is going," Betway's Nigeria supervisor Lere Awokoya said.

"The growth in the number of fintechs, and the government as an enabler, has actually helped business to prosper. These technological shifts encouraged Betway to start operating in Nigeria," he said.

FINTECH COMPETITION

sports betting companies capitalizing the soccer craze worked up by Nigeria's participation worldwide Cup state they are finding the payment systems produced by regional start-ups such as Paystack are proving popular online.

Paystack and another local start-up Flutterwave, both founded in 2016, are offering competitors for Nigeria's Interswitch which was set up in 2002 and was the main platform used by companies running in Nigeria.

"We included Paystack as one of our payment options with no fanfare, without revealing to our customers, and within a month it soared to the primary most secondhand payment choice on the website," stated Akin Alabi, creator of NairabBET.

He stated NairaBET, the nation's 2nd biggest wagering firm, now had 2 million routine clients on its website, up from 500,000 in 2013, and Paystack remained the most popular payment choice given that it was added in late 2017.

Paystack was established by two Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who got early stage financing 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 number of regular 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 month," said Emmanuel Quartey, Paystack's head of growth.

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

Paystack said it allows payments for a number of sports betting companies but likewise a broad variety of businesses, from utility services to carry companies to insurance company Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is also backed by the Y-Combinator program as well as investor 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 intending to tap into 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 organization 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 company launched in 2015.

NairaBET's Alabi said its sales were divided between stores and online but the ease of electronic payments, cost of running stores and capability for clients to avoid the preconception of sports betting in public indicated online transactions would grow.

But in spite of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was very important to have a shop network, not least due to the fact that many clients still stay hesitant to invest online.

He said the company, with about 60 percent of Nigeria's sports betting market, had a substantial network. Nigerian wagering stores frequently function as social centers where customers can enjoy soccer totally free of charge while putting bets.

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

Richard Onuka, a factory employee who makes 25,000 naira a month, was fixated on a TV screen inside. He said he began gambling three months ago 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)