By Alexis Akwagyiram and Didi Akinyelure

LAGOS, June 25 (Reuters) - Online sports betting is flourishing in soccer-mad Nigeria mainly thanks to payment systems developed by homegrown innovation firms that are beginning to make online businesses more practical.

For many years, mobile payments failed to remove in Nigeria as they have in nations such as Kenya, where Safaricom's M-Pesa cash transfers have actually cultivated a culture of cashless payments.

Fear of electronic scams and sluggish internet speeds have actually held Nigerian online customers back but wagering companies states the new, fast digital payment systems underpinning their sites are changing mindsets towards online transactions.

"We have seen considerable development in the variety of payment services that are readily available. All that is definitely changing the gaming area," stated Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria's industrial capital.

"The operators will choose whoever is quicker, whoever can connect to their platform with less issues and glitches," he said, including that taxes from sports betting in Lagos State rose 30 percent to 40 percent in 2017 from 2016.

That development has actually been matched by a rise 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 almost 190 million, rising mobile phone usage and falling data costs, Nigeria has long been viewed as a terrific opportunity for online organizations - once consumers feel comfy with electronic payments.

Online gambling companies state that is taking place, though reaching the 10s of countless Nigerians without access to banking services remains a difficulty for pure online sellers.

British online sports betting firm Betway opened its 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 industry is going," Betway's Nigeria manager Lere Awokoya stated.

"The growth in the variety of fintechs, and the federal government as an enabler, has actually helped business to prosper. These technological shifts motivated Betway to begin 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 say they are discovering the payment systems developed by local start-ups such as Paystack are showing popular online.

Paystack and another local start-up Flutterwave, both founded in 2016, are providing competitors for Nigeria's Interswitch which was set up in 2002 and was the primary platform utilized by services running in Nigeria.

"We added Paystack as one of our payment choices with no fanfare, without revealing to our clients, and within a month it soared to the primary most secondhand payment option on the site," stated Akin Alabi, creator of NairabBET.

He stated NairaBET, the nation's 2nd greatest sports betting company, now had 2 million routine consumers on its site, up from 500,000 in 2013, and Paystack remained the most popular payment choice considering that it was included late 2017.

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

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, stated the number of month-to-month deals it processed increased 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 each and every single month," stated Emmanuel Quartey, Paystack's head of growth.

He stated a community of designers had emerged around Paystack, developing software application to incorporate the platform into websites. "We have actually seen a development because community and they have actually brought us along," said Quartey.

Paystack said it enables payments for a number of sports betting firms however likewise a wide variety of companies, from utility services to transport companies to insurer Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is also backed by the Y-Combinator program as well as 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 coincided with the arrival of foreign financiers hoping to use sports betting wagering.

Industry experts state the sector creates about $1 billion a year and is likely to grow faster than in South Africa and Kenya where business is more established.

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 pattern, taking a half stake in market leader Bet9ja when the Nigerian firm released in 2015.

NairaBET's Alabi said its sales were divided between stores and online but the ease of electronic payments, cost of running stores and ability for customers to avoid the preconception of gaming in public implied online transactions would grow.

But in spite of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was necessary to have a store network, not least due to the fact that many consumers still remain hesitant to spend online.

He stated the company, with about 60 percent of Nigeria's sports betting market, had a comprehensive network. Nigerian sports betting shops typically act as social centers where customers can watch soccer totally free of charge while positioning bets.

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

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

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