By Alexis Akwagyiram and Didi Akinyelure

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

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

Fear of electronic fraud and slow internet speeds have held Nigerian online consumers back however wagering companies states the new, fast digital payment systems underpinning their websites are altering mindsets towards online deals.

"We have seen considerable growth in the number of payment options that are available. All that is absolutely changing the video gaming area," stated Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria's commercial capital.

"The operators will choose whoever is much faster, whoever can connect to their platform with less concerns and glitches," he stated, adding that taxes from sports betting in Lagos State rose 30 percent to 40 percent in 2017 from 2016.

That growth has been matched by a rise in web payments, according to data from the Nigeria Inter-Bank Settlement System (NIBSS), which is owned by the central 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 mobile phone usage and falling data costs, Nigeria has long been seen as an excellent opportunity for online services - once customers feel comfy with electronic payments.

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

British online wagering 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 market is going," Betway's Nigeria supervisor Lere Awokoya said.

"The development in the number of fintechs, and the government as an enabler, has actually assisted business to grow. These technological shifts motivated Betway to start running in Nigeria," he stated.

FINTECH COMPETITION

sports betting companies cashing in on the soccer frenzy whipped up by Nigeria's participation in the World Cup state they are finding the payment systems created by local startups such as Paystack are showing popular online.

Paystack and another local 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 services operating in Nigeria.

"We included Paystack as one of our payment options without any excitement, without announcing to our clients, and within a month it shot up to the top most secondhand payment option on the website," said Akin Alabi, founder of NairabBET.

He said NairaBET, the country's 2nd biggest wagering firm, now had 2 million regular clients on its site, up from 500,000 in 2013, and Paystack stayed the most popular payment choice because it was included in late 2017.

Paystack was established by 2 Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who received early phase financing in Silicon Valley's Y-Combinator program.

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 variety of month-to-month deals 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 single month," said Emmanuel Quartey, Paystack's head of development.

He said an environment of designers had emerged around Paystack, producing software to incorporate the platform into sites. "We have seen a growth because community and they have actually carried us along," said Quartey.

Paystack stated it makes it possible for payments for a variety of sports betting companies but also a wide variety of organizations, 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 program 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 actually accompanied the arrival of foreign investors intending to use sports betting wagering.

Industry experts state the sector creates about $1 billion a year and is most 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 established in Nigeria in the last 2 years while Italy's Goldbet was ahead of the trend, taking a half stake in market leader Bet9ja when the Nigerian company launched in 2015.

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

But despite advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was important to have a store network, not least since numerous consumers still stay hesitant to invest online.

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

At a BetKing hall deep inside the dynamic Oshodi market in Lagos, dozens of soccer fans collected to see Nigeria's last warm up video 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 said he began sports betting three months earlier and bets up to 1,000 naira a day.

"Since I have been playing I have not won anything however I think that one day I will win," stated Onuka. ($1 = 314.5000 naira) (Reporting by Alexis Akwagyiram and Didi Akinyelure in Lagos; modifying by David Clarke)