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 established by homegrown technology firms that are beginning to make online businesses more viable.

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

Fear of electronic scams and sluggish web speeds have held Nigerian online customers back however sports betting companies says the new, fast digital payment systems underpinning their websites are altering attitudes towards online transactions.

"We have actually seen substantial growth in the variety of payment options that are readily available. All that is certainly altering the video gaming space," said Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria's commercial capital.

"The operators will opt for whoever is 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 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 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 nearly 190 million, increasing smart phone use and falling data expenses, Nigeria has long been seen as a fantastic opportunity for online services - once customers feel comfy with electronic payments.

Online gambling companies say that is happening, though reaching the tens of millions of Nigerians without access to banking services stays a challenge for pure online sellers.

British online sports betting company Betway opened its very first African service 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 assisted the business to prosper. These technological shifts motivated Betway to start operating in Nigeria," he said.

FINTECH COMPETITION

sports betting firms capitalizing the soccer craze worked up by Nigeria's participation on the planet Cup state they are discovering the payment systems developed by local startups such as Paystack are proving popular online.

Paystack and another local startup Flutterwave, both founded in 2016, are providing 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 alternatives without any fanfare, without revealing to our consumers, and within a month it soared to the top most pre-owned payment choice on the site," stated Akin Alabi, creator of NairabBET.

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

Paystack was set up by two Nigerian computer science 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 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 each and every single month," stated Emmanuel Quartey, Paystack's head of growth.

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

Paystack stated it allows payments for a variety of sports betting firms but likewise a vast array of businesses, from energy services to transfer companies to insurance company Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator programme along with investor Greycroft Partners and Green Visor Capital and the Omidyar Network. It raised $10 million last year.

FOREIGN INVESTMENT

Shifts in Nigeria's payment culture have corresponded with the arrival of foreign financiers intending to use sports betting.

Industry experts say the sector creates 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 both established 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 introduced in 2015.

NairaBET's Alabi said its sales were divided between stores and online but the ease of electronic payments, expense of running shops and capability for consumers to avoid the preconception of gaming in public implied online deals would grow.

But regardless of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was essential to have a shop network, not least due to the fact that many clients still stay unwilling to spend online.

He said the business, with about 60 percent of Nigeria's sports betting market, had a substantial network. Nigerian sports betting stores often serve as social centers where clients can view soccer complimentary of charge while placing bets.

At a BetKing hall deep inside the dynamic Oshodi market in Lagos, dozens of soccer fans collected to watch Nigeria's final heat up 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 sports betting three months back and bets up to 1,000 naira a day.

"Since I have 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; editing by David Clarke)