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By Alexis Akwagyiram and Didi Akinyelure

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

For several years, mobile payments failed to take off in Nigeria as they have in nations such as Kenya, where Safaricom's M-Pesa money transfers have actually fostered a culture of cashless payments.

Fear of electronic scams and slow internet speeds have held Nigerian online consumers back however states the brand-new, quick digital payment systems underpinning their sites are changing mindsets towards online transactions.

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

"The operators will choose whoever is quicker, whoever can connect to their platform with less issues and glitches," 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 an increase in web payments, according to data from the Nigeria Inter-Bank Settlement System (NIBSS), which is owned by the main bank and licensed 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, rising smart phone use and falling information costs, Nigeria has long been seen as a terrific opportunity for online businesses - once consumers feel comfortable with electronic payments.

Online gambling companies state that is occurring, though reaching the 10s of millions of Nigerians without access to banking services remains a challenge for pure online merchants.

British online sports betting company Betway opened its first African company in Kenya in 2015, followed by Uganda, Ghana and South Africa. It released 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 stated.

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

FINTECH COMPETITION

sports betting firms capitalizing the soccer craze whipped up by Nigeria's involvement in the World Cup say they are finding the payment systems created by local start-ups such as Paystack are proving popular online.

Paystack and another regional start-up Flutterwave, both established in 2016, are offering competitors 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 options with no excitement, without revealing to our clients, and within a month it shot up to the primary most used payment choice on the site," stated Akin Alabi, creator of NairabBET.

He said NairaBET, the country's 2nd most significant sports betting firm, now had 2 million regular customers on its website, up from 500,000 in 2013, and Paystack stayed the most popular payment option given that it was included late 2017.

Paystack was set up by two Nigerian computer science graduates, Shola Akinlade and Ezra Olubi, who got early phase 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 frenetic Ikeja district of Lagos, said the variety of regular monthly transactions it processed rose from about 8,000 in early 2016 to more than 900,000 since June 2018.
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"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 stated an ecosystem of developers had emerged around Paystack, producing software to integrate the platform into websites. "We have actually seen a development because neighborhood and they have actually carried us along," said Quartey.

Paystack stated it allows payments for a variety of sports betting companies however likewise a large range of businesses, from utility services to transfer business to insurer Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator programme along with venture 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.
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Industry professionals state the sector produces about $1 billion a year and is likely to grow faster than in South Africa and Kenya where the business is more established.
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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 half stake in market leader Bet9ja when the Nigerian firm launched in 2015.

NairaBET's Alabi said its sales were divided in between shops and online however the ease of electronic payments, cost of running shops and capability for consumers to avoid the stigma of sports betting in public suggested online transactions would grow.
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But regardless of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was necessary to have a shop network, not least since many consumers still stay hesitant to spend online.

He said the company, with about 60 percent of Nigeria's sports betting wagering market, had a substantial network. Nigerian sports betting shops frequently serve as social centers where customers can watch soccer complimentary of charge while putting bets.

At a BetKing hall deep inside the dynamic Oshodi market in Lagos, lots of soccer fans gathered to watch Nigeria's last heat up video game before the World Cup.
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Richard Onuka, a factory employee who earns 25,000 naira a month, was fixated on a television screen inside. He stated he started sports betting three months ago and bets as much as 1,000 naira a day.

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