By Alexis Akwagyiram and Didi Akinyelure

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

For years, mobile payments stopped working 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 fraud and slow web speeds have held Nigerian online consumers back however wagering firms states the new, quick digital payment systems underpinning their websites are altering attitudes towards online transactions.

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

"The operators will go with whoever is quicker, whoever can connect to their platform with less concerns and glitches," he said, adding that taxes from sports betting 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 very first quarter of 2018 there were almost 10 million worth 61 billion.

With a young population of nearly 190 million, increasing smart phone use and falling information costs, Nigeria has long been seen as an excellent chance for online companies - once customers feel comfortable with electronic payments.

Online sports betting companies say that is occurring, though reaching the 10s of countless Nigerians without access to banking services remains an obstacle for pure online retailers.

British online wagering company 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 manager Lere Awokoya said.

"The growth in the number of fintechs, and the government as an enabler, has assisted business to prosper. These technological shifts encouraged Betway to begin running in Nigeria," he stated.

FINTECH COMPETITION

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

Paystack and another regional start-up Flutterwave, both established in 2016, are providing competition for Nigeria's Interswitch which was established in 2002 and was the primary platform used by organizations operating in Nigeria.

"We added Paystack as one of our payment alternatives without any fanfare, without revealing to our consumers, and within a month it shot up to the primary most secondhand payment alternative on the website," stated Akin Alabi, creator of NairabBET.

He stated NairaBET, the nation's 2nd biggest sports betting company, now had 2 million regular clients on its site, up from 500,000 in 2013, and Paystack stayed the most popular payment alternative since it was included late 2017.

Paystack was established by 2 Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who got 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 mad Ikeja district of Lagos, stated the variety of regular monthly deals 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," stated Emmanuel Quartey, Paystack's head of growth.

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

Paystack stated it makes it possible for payments for a number of sports betting companies but also a large range of businesses, from energy services to carry business to insurer Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator program along with endeavor capitalists 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 accompanied the arrival of foreign investors wanting to use sports betting.

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

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 pattern, taking a 50 percent stake in market leader Bet9ja when the Nigerian company introduced in 2015.

NairaBET's Alabi said its sales were split in between shops and online however the ease of electronic payments, expense of running stores and capability for clients to avoid the stigma of gambling in public indicated online transactions would grow.

But regardless of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was essential to have a store network, not least because lots of clients still remain unwilling to invest online.

He stated the business, with about 60 percent of Nigeria's sports betting market, had a substantial network. Nigerian sports betting shops often function as social hubs where customers can see soccer free of charge while putting bets.

At a BetKing hall deep inside the bustling Oshodi market in Lagos, lots of soccer fans gathered to enjoy Nigeria's final warm up video game before the World Cup.

Richard Onuka, a factory worker who makes 25,000 naira a month, was fixated on a television screen inside. He stated he started gambling three months earlier and bets up to 1,000 naira a day.

"Since I have actually 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; editing by David Clarke)