By Alexis Akwagyiram and Didi Akinyelure
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LAGOS, June 25 (Reuters) - Online sports betting wagering is flourishing in soccer-mad Nigeria largely thanks to payment systems established by homegrown technology firms that are beginning to make online companies more feasible.

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

Fear of electronic fraud and sluggish internet speeds have held Nigerian online consumers back but wagering firms says the brand-new, quick digital payment systems underpinning their sites are changing mindsets towards online deals.

"We have seen significant development in the number of payment options that are readily available. All that is definitely altering the video gaming space," stated Seun Anibaba, CEO of Lagos State Board, video gaming regulator in Nigeria's industrial capital.

"The operators will go with whoever is much faster, whoever can link to their platform with less problems and problems," he stated, including 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 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 jumped to 29 million worth 185 billion in 2017 and in the first quarter of 2018 there were nearly 10 million worth 61 billion.

With a young population of nearly 190 million, increasing smart phone usage and falling data costs, Nigeria has actually long been viewed as a great chance for online organizations - once consumers feel comfortable with electronic payments.

Online sports betting companies say that is taking place, though reaching the tens of countless Nigerians without access to banking services remains a challenge for pure online merchants.

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

"There is a gradual shift to online now, that is where the market 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 flourish. These technological shifts encouraged Betway to begin running in Nigeria," he stated.

FINTECH COMPETITION

sports betting firms capitalizing the soccer frenzy worked up by Nigeria's participation in the World Cup say they are finding the payment systems produced by regional startups such as Paystack are proving popular online.

Paystack and another local startup Flutterwave, both established in 2016, are supplying competitors for Nigeria's Interswitch which was established in 2002 and was the main platform used by services running in Nigeria.
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"We included Paystack as one of our payment alternatives with no excitement, without announcing to our consumers, and within a month it soared to the primary most used payment alternative on the website," said Akin Alabi, founder of NairabBET.

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

Paystack was established by 2 Nigerian computer technology 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 investors consisting of China's Tencent and Comcast Ventures in the United States.

Paystack, based in the frenetic 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 as of 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, developing software application to integrate the platform into websites. "We have seen a growth because community and they have actually carried us along," said Quartey.

Paystack said it makes it possible for payments for a number of wagering firms but also a vast array of services, from energy services to transfer business to insurance provider Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is likewise 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 last year.

FOREIGN INVESTMENT

Shifts in Nigeria's payment culture have actually accompanied the arrival of foreign investors hoping to take advantage of sports betting.

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 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 firm introduced in 2015.

NairaBET's Alabi stated its sales were divided between shops and online but the ease of electronic payments, expense of running stores and ability for consumers to avoid the stigma of gambling in public indicated online deals would grow.

But regardless of 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 many clients still remain hesitant to spend online.

He said the business, with about 60 percent of Nigeria's sports betting wagering market, had an extensive network. Nigerian wagering shops frequently function as social centers where consumers can enjoy soccer totally free of charge while placing bets.

At a BetKing hall deep inside the dynamic Oshodi market in Lagos, dozens of soccer fans collected to enjoy Nigeria's final heat up game before the World Cup.

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 3 months earlier and bets approximately 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," stated Onuka. ($1 = 314.5000 naira) (Reporting by Alexis Akwagyiram and Didi Akinyelure in Lagos