By Alexis Akwagyiram and Didi Akinyelure

LAGOS, June 25 (Reuters) - Online sports betting is booming in soccer-mad Nigeria largely thanks to payment systems established by homegrown technology firms that are starting to make online businesses more viable.

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

Fear of electronic fraud and sluggish internet speeds have held Nigerian online customers back however sports betting firms states the new, fast digital payment systems underpinning their sites are changing attitudes towards online transactions.

"We have actually seen substantial development in the variety of payment solutions that are readily available. All that is definitely altering the gaming space," said Seun Anibaba, CEO of Lagos State Lotteries Board, gaming regulator in Nigeria's industrial capital.

"The operators will opt for whoever is faster, whoever can connect to their platform with less issues and problems," he said, including that taxes from sports betting wagering in Lagos State increased 30 percent to 40 percent in 2017 from 2016.

That development has been matched by a rise in web payments, according to information 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 leapt to 29 million worth 185 billion in 2017 and in the first quarter of 2018 there were almost 10 million worth 61 billion.

With a young population of nearly 190 million, increasing mobile phone use and falling information expenses, Nigeria has actually long been seen as an excellent chance for online companies - once consumers feel comfy with electronic payments.

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

British online wagering firm Betway opened its first African company in Kenya in 2015, followed by Uganda, Ghana and South Africa. It introduced 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 development in the variety of fintechs, and the government as an enabler, has assisted business to thrive. These technological shifts motivated Betway to begin operating in Nigeria," he stated.

FINTECH COMPETITION

sports betting firms capitalizing the soccer craze whipped up by Nigeria's participation worldwide Cup say they are discovering the payment systems produced by regional start-ups such as Paystack are showing popular online.

Paystack and another regional startup Flutterwave, both founded in 2016, are supplying competitors for Nigeria's Interswitch which was established in 2002 and was the main platform used by organizations running in Nigeria.

"We included Paystack as one of our payment options without any excitement, without announcing to our customers, and within a month it soared to the primary most secondhand payment alternative on the site," stated Akin Alabi, founder of NairabBET.

He said NairaBET, the nation's second biggest sports betting company, now had 2 million regular customers on its website, up from 500,000 in 2013, and Paystack remained the most popular payment choice given that it was included late 2017.

Paystack was established by two Nigerian computer technology 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 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 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 every month," said Emmanuel Quartey, Paystack's head of growth.

He stated an ecosystem of designers had emerged around Paystack, developing software to integrate the platform into sites. "We have seen a growth because neighborhood and they have carried us along," stated Quartey.

Paystack said it allows payments for a number of wagering companies but also a large range of organizations, from energy services to transport business to insurance company Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is also backed by the Y-Combinator program as well as investor 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 corresponded with the arrival of foreign investors wanting to use sports betting.

Industry experts say 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 led the pattern, taking a half stake in market leader Bet9ja when the Nigerian firm introduced in 2015.

NairaBET's Alabi stated its sales were split between stores and online but the ease of electronic payments, cost of running shops and ability for clients to avoid the stigma of sports betting in public meant 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 shop network, not least because lots of consumers still stay reluctant to invest online.

He stated the business, with about 60 percent of Nigeria's sports betting wagering market, had an extensive network. Nigerian sports betting stores often function as social hubs where clients can see soccer complimentary of charge while putting bets.

At a BetKing hall deep inside the bustling Oshodi market in Lagos, dozens of soccer fans collected to see Nigeria's last warm up game before the World Cup.

Richard Onuka, a factory worker who makes 25,000 naira a month, was focused on a TV screen inside. He stated he began sports betting 3 months earlier and bets approximately 1,000 naira a day.

"Since I have actually been playing I have 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; modifying by David Clarke)