By Alexis Akwagyiram and Didi Akinyelure

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

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 actually promoted a culture of cashless payments.

Fear of electronic fraud and slow internet speeds have held Nigerian online customers back however sports betting firms says the new, quick digital payment systems underpinning their websites are altering attitudes towards online transactions.

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

"The operators will opt for whoever is much faster, whoever can link to their platform with less concerns and glitches," he stated, including that taxes from sports betting wagering in Lagos State increased 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 central 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 first quarter of 2018 there were almost 10 million worth 61 billion.

With a young population of nearly 190 million, increasing mobile phone usage and falling data expenses, Nigeria has long been viewed as a terrific opportunity for online services - once consumers feel comfortable with electronic payments.

Online sports betting firms say that is happening, though reaching the 10s of countless Nigerians without access to banking services stays a difficulty for pure online sellers.

British online sports betting 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 progressive shift to online now, that is where the market is going," Betway's Nigeria supervisor Lere Awokoya stated.

"The growth in the number of fintechs, and the federal government as an enabler, has assisted business to thrive. These technological shifts encouraged Betway to start operating in Nigeria," he said.

FINTECH COMPETITION

Betting companies cashing in on the soccer frenzy worked up by Nigeria's involvement in the World Cup state they are finding the payment systems developed by regional startups such as Paystack are proving popular online.

Paystack and another regional startup Flutterwave, both established in 2016, are providing competition 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 alternatives without any excitement, without announcing to our clients, and within a month it soared to the primary most pre-owned payment alternative on the website," said Akin Alabi, founder of NairabBET.

He stated NairaBET, the country's second greatest wagering firm, now had 2 million regular customers on its website, up from 500,000 in 2013, and Paystack stayed the most popular payment choice since it was added in late 2017.

Paystack was established by two Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who received early phase financing 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 number of month-to-month transactions 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 every month," said Emmanuel Quartey, Paystack's head of development.

He stated an ecosystem of developers had emerged around Paystack, creating software application to incorporate the platform into sites. "We have actually seen a development because neighborhood and they have actually carried us along," stated Quartey.

Paystack stated it makes it possible for payments for a number of sports betting companies but likewise a wide variety of companies, from energy services to transport business to insurance provider 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 actually accompanied the arrival of foreign investors wishing 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 developed.

Russia's 1XBet and Slovakia's DOXXbet have actually both established in Nigeria in the last two years while Italy's Goldbet led the trend, taking a 50 percent stake in market leader Bet9ja when the Nigerian firm released in 2015.

NairaBET's Alabi said its sales were split between shops and online but the ease of electronic payments, cost of running stores and capability for customers to prevent the stigma of gambling in public indicated online transactions would grow.

But despite advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was essential to have a store network, not least due to the fact that lots of consumers still remain unwilling to invest online.

He said the company, with about 60 percent of Nigeria's sports betting market, had an extensive network. Nigerian sports betting shops typically serve as social hubs where consumers can see soccer complimentary of charge while putting bets.

At a BetKing hall deep inside the busy Oshodi market in Lagos, dozens of soccer fans gathered to view Nigeria's last 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 stated he started gambling 3 months earlier and bets as much as 1,000 naira a day.

"Since I have 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)