By Alexis Akwagyiram and Didi Akinyelure

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

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

Fear of electronic scams and sluggish internet speeds have actually held Nigerian online customers back however sports betting firms says the brand-new, quick digital payment systems underpinning their sites are changing mindsets towards online deals.

"We have seen substantial growth in the variety of payment solutions that are offered. All that is definitely altering the gaming area," stated Seun Anibaba, CEO of Lagos State Lotteries Board, gaming regulator in Nigeria's business capital.

"The operators will go with whoever is much faster, whoever can connect to their platform with less issues and glitches," 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 an increase in web payments, according to information from the Nigeria Inter-Bank Settlement System (NIBSS), which is owned by the reserve 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 very first quarter of 2018 there were nearly 10 million worth 61 billion.

With a young population of almost 190 million, rising cellphone usage and falling information expenses, Nigeria has long been viewed as an excellent opportunity for online companies - once customers feel comfy with electronic payments.

Online gaming companies say that is taking place, though reaching the 10s of millions of Nigerians without access to banking services remains an obstacle for pure online retailers.

British online wagering company Betway opened its very 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 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 assisted business to flourish. These technological shifts motivated Betway to start running in Nigeria," he stated.

FINTECH COMPETITION

sports betting companies cashing in on the soccer craze whipped up by Nigeria's involvement worldwide Cup state 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 established in 2016, are providing competitors for Nigeria's Interswitch which was established in 2002 and was the primary platform used by businesses running in Nigeria.

"We added Paystack as one of our payment choices with no fanfare, without announcing to our clients, and within a month it soared to the number one most used payment alternative on the website," stated Akin Alabi, founder of NairabBET.

He stated NairaBET, the country's 2nd most significant sports betting company, now had 2 million routine clients on its website, up from 500,000 in 2013, and Paystack stayed the most popular payment option since it was included in late 2017.

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

In December 2016, it raised $1.3 million from investors consisting of China's Tencent and Comcast Ventures in the United States.

Paystack, based in the mad Ikeja district of Lagos, stated the variety of monthly 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 each and every single month," said Emmanuel Quartey, Paystack's head of growth.

He said an environment of developers had actually emerged around Paystack, creating software application to incorporate the platform into websites. "We have seen a growth in that neighborhood and they have actually carried us along," stated Quartey.

Paystack stated it enables payments for a number of wagering companies but likewise a broad variety of companies, from energy services to carry business to insurance company Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is also backed by the Y-Combinator programme 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 corresponded with the arrival of foreign investors hoping to tap into sports betting wagering.

Industry experts say the sector produces 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 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 introduced in 2015.

NairaBET's Alabi stated its sales were divided in between shops and online but the ease of electronic payments, expense of running shops and capability for clients to prevent the preconception of gambling in public indicated online deals would grow.

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

He said the business, with about 60 percent of Nigeria's sports betting wagering market, had a substantial network. Nigerian sports betting shops typically function as social centers where consumers can see soccer totally free of charge while putting bets.

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

Richard Onuka, a factory worker who makes 25,000 naira a month, was focused on a television screen inside. He said he began gambling 3 months earlier and bets up to 1,000 naira a day.

"Since I have been playing I have actually not won anything however I believe 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)