By Alexis Akwagyiram and Didi Akinyelure
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LAGOS, June 25 (Reuters) - Online sports betting is growing in soccer-mad Nigeria mainly thanks to payment systems developed by homegrown technology firms that are beginning to make online services more practical.

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

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

"We have actually seen considerable growth in the number of payment solutions that are offered. All that is absolutely altering 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 faster, whoever can link to their platform with less problems and problems,” he stated, adding that taxes from sports betting in Lagos State increased 30 percent to 40 percent in 2017 from 2016.

That growth has been matched by an increase 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 an overall 132 billion naira ($420 million). Transactions leapt to 29 million worth 185 billion in 2017 and in the very 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 expenses, Nigeria has long been seen as a terrific opportunity for online companies - once customers feel comfortable with electronic payments.

Online sports betting companies say that is happening, though reaching the tens of countless Nigerians without access to banking services stays an obstacle for pure online merchants.

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

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

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

FINTECH COMPETITION

sports betting firms capitalizing the soccer frenzy whipped up by Nigeria's participation on the planet Cup say they are finding the payment systems created by local start-ups such as Paystack are showing popular online.

Paystack and another local startup Flutterwave, both founded in 2016, are offering competition for Nigeria's Interswitch which was set up in 2002 and was the primary platform utilized by companies operating in Nigeria.

"We added Paystack as one of our payment alternatives without any fanfare, without revealing to our clients, and within a month it shot up to the primary most used payment choice on the website,” stated Akin Alabi, founder of NairabBET.

He said NairaBET, the nation's 2nd 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 option given that 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 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 month,” said Emmanuel Quartey, Paystack's head of development.

He stated an ecosystem of designers had actually emerged around Paystack, creating software to incorporate the platform into sites. “We have seen a growth in that community and they have brought us along,” stated Quartey.

Paystack said it enables payments for a number of wagering companies however also a large range of organizations, from utility services to carry companies 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 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 accompanied the arrival of foreign investors intending to tap into sports betting.

Industry professionals 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 established.

Russia's 1XBet and Slovakia's DOXXbet have actually both established in Nigeria in the last two years while Italy's Goldbet was ahead of the pattern, taking a 50 percent stake in market leader Bet9ja when the Nigerian company released in 2015.

NairaBET's Alabi said its sales were between stores and online however the ease of electronic payments, cost of running shops and capability for consumers to prevent the stigma of gaming in public implied online transactions would grow.

But despite advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was very important to have a store network, not least due to the fact that lots of customers still stay reluctant to invest online.

He stated the business, with about 60 percent of Nigeria's sports betting market, had an extensive network. Nigerian wagering shops typically function as social centers where customers can watch soccer totally free of charge while positioning bets.

At a BetKing hall deep inside the dynamic Oshodi market in Lagos, dozens of soccer fans collected to see Nigeria's last warm up video game before the World Cup.
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Richard Onuka, a factory worker who makes 25,000 naira a month, was fixated on a television screen inside. He stated he started gambling 3 months ago and bets as much as 1,000 naira a day.

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