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By Alexis Akwagyiram and Didi Akinyelure

LAGOS, June 25 (Reuters) - Online sports betting is flourishing in soccer-mad Nigeria largely thanks to payment systems developed by homegrown innovation firms that are beginning to make online services more practical.

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 actually cultivated a culture of cashless payments.

Fear of electronic fraud and sluggish web speeds have held Nigerian online consumers back however sports betting firms states the brand-new, fast digital payment systems underpinning their sites are changing mindsets towards online transactions.

"We have seen significant development in the number of payment options that are offered. All that is definitely changing the video gaming space," stated Seun Anibaba, CEO of Lagos State Lotteries Board, 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, adding 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 a rise in web payments, according to data 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 a total 132 billion naira ($420 million). Transactions jumped 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 smart phone usage and falling data expenses, Nigeria has long been seen as an excellent opportunity for online companies - once customers feel comfy with electronic payments.

Online sports betting companies say that is happening, though reaching the 10s of millions of Nigerians without access to banking services stays a difficulty for pure online retailers.

British online sports betting company 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 gradual shift to online now, that is where the market is going," Betway's Nigeria manager Lere Awokoya said.

"The development in the variety of fintechs, and the federal government as an enabler, has assisted business to grow. These technological shifts motivated Betway to start running in Nigeria," he said.

FINTECH COMPETITION

sports betting companies cashing in on the soccer frenzy worked up by Nigeria's involvement worldwide Cup state they are finding the payment systems created by local startups 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 organizations running in Nigeria.

"We added Paystack as one of our payment choices with no excitement, without announcing to our consumers, and within a month it shot up to the number one most pre-owned payment alternative on the website," stated Akin Alabi, founder of NairabBET.

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

Paystack was established by two Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who received early stage funding 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 mad Ikeja district of Lagos, stated 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 every single month," stated Emmanuel Quartey, Paystack's head of development.

He said an environment of designers had actually emerged around Paystack, developing software to integrate the platform into sites. "We have seen a development in that community and they have actually brought us along," stated Quartey.

Paystack said it makes it possible for payments for a number of wagering companies but likewise a large range of businesses, from utility services to carry business to insurance provider Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is also backed by the Y-Combinator programme 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 actually accompanied the arrival of foreign financiers hoping to take advantage of sports betting wagering.

Industry experts state the sector produces about $1 billion a year and is likely to grow faster than in South Africa and Kenya where business is more developed.

Russia's 1XBet and Slovakia's DOXXbet have both set up in in the last two years while Italy's Goldbet led the pattern, taking a 50 percent stake in market leader Bet9ja when the Nigerian company introduced in 2015.

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

But despite advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was essential to have a store network, not least due to the fact that lots of consumers still remain reluctant to invest online.

He said the company, with about 60 percent of Nigeria's sports betting market, had an extensive network. Nigerian sports betting stores typically act as social hubs where consumers can view soccer free of charge while positioning bets.

At a BetKing hall deep inside the busy Oshodi market in Lagos, lots of soccer fans gathered to view Nigeria's last warm up video game before the World Cup.
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Richard Onuka, a factory employee who earns 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 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