By Alexis Akwagyiram and Didi Akinyelure

LAGOS, June 25 (Reuters) - Online sports betting is growing in soccer-mad Nigeria mostly thanks to payment systems developed by homegrown technology companies that are starting to make online services more practical.

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

Fear of electronic fraud and slow internet speeds have held Nigerian online consumers back but sports betting firms says the new, quick digital payment systems underpinning their sites are changing attitudes towards online transactions.

"We have seen considerable growth in the variety of payment services that are offered. All that is absolutely altering the 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 glitches," he said, adding that taxes from sports betting in Lagos State rose 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 main bank and licensed 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 almost 10 million worth 61 billion.

With a young population of almost 190 million, increasing cellphone usage and falling information costs, Nigeria has long been viewed as an excellent chance for online organizations - once customers feel comfortable with electronic payments.

Online gambling companies say that is taking place, though reaching the tens of countless Nigerians without access to banking services remains a difficulty for pure online retailers.

British online sports betting company Betway opened its first African business in Kenya in 2015, followed by Uganda, Ghana and South Africa. It introduced in Nigeria in January.

"There is a progressive 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 actually assisted the organization to flourish. These technological shifts encouraged Betway to begin running in Nigeria," he stated.

FINTECH COMPETITION

sports betting companies capitalizing the soccer frenzy worked up by Nigeria's involvement worldwide Cup state they are discovering the payment systems developed by regional startups such as Paystack are showing popular online.

Paystack and another regional start-up Flutterwave, both founded in 2016, are offering competition for Nigeria's Interswitch which was set up in 2002 and was the main platform used by services running in Nigeria.

"We added Paystack as one of our payment alternatives with no fanfare, without announcing to our customers, and within a month it soared to the number one most pre-owned payment choice on the website," stated Akin Alabi, founder of NairabBET.

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

Paystack was established by 2 Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who received early stage financing 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, stated the number 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 said a community of developers had emerged around Paystack, creating software application to integrate the platform into sites. "We have seen a development in that community and they have brought us along," stated Quartey.

Paystack said it makes it possible for payments for a variety of sports betting firms however likewise a large variety of businesses, from utility services to transport business to insurer 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 coincided with the arrival of foreign financiers wishing to use sports betting wagering.

Industry specialists say the sector generates about $1 billion a year and is most likely to grow faster than in South Africa and Kenya where business is more developed.

Russia's 1XBet and Slovakia's DOXXbet have actually both set up in Nigeria in the last 2 years while Italy's Goldbet was ahead of 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, expense of running stores and capability for customers to avoid the stigma of sports betting in public indicated online transactions 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 consumers still remain reluctant to invest online.

He stated the business, with about 60 percent of Nigeria's sports betting market, had a substantial network. Nigerian wagering stores often function as social centers where customers can view soccer complimentary of charge while positioning bets.

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

Richard Onuka, a factory worker who earns 25,000 naira a month, was focused on a television screen inside. He said he began gambling three months ago and bets approximately 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," stated Onuka. ($1 = 314.5000 naira) (Reporting by Alexis Akwagyiram and Didi Akinyelure in Lagos; editing by David Clarke)