By Alexis Akwagyiram and Didi Akinyelure

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

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

Fear of electronic fraud and sluggish web speeds have held Nigerian online consumers back but wagering companies states the new, quick digital payment systems underpinning their sites are altering mindsets towards online transactions.

"We have actually seen substantial growth in the number of payment services that are available. All that is definitely altering the video gaming area," stated Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria's commercial capital.

"The operators will opt for whoever is quicker, whoever can connect to their platform with less issues and glitches," he said, including that taxes from sports betting wagering 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 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 almost 190 million, increasing mobile phone usage and falling data expenses, Nigeria has long been seen as a great opportunity for online businesses - once customers feel comfortable with electronic payments.

Online gambling companies state that is taking place, though reaching the tens of countless Nigerians without access to banking services remains an obstacle for pure online merchants.

British online wagering 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 steady shift to online now, that is where the industry is going," Betway's Nigeria supervisor Lere Awokoya stated.

"The development in the variety of fintechs, and the federal government as an enabler, has assisted the service to grow. 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 state they are finding the payment systems produced by local startups such as Paystack are proving popular online.

Paystack and another regional start-up Flutterwave, both founded in 2016, are supplying competitors for Nigeria's Interswitch which was established in 2002 and was the primary platform used by services operating in Nigeria.

"We included Paystack as one of our payment options without any fanfare, without announcing to our clients, and within a month it soared to the top most used payment choice on the website," stated Akin Alabi, founder of NairabBET.

He stated NairaBET, the country's second biggest sports betting company, now had 2 million regular consumers on its site, up from 500,000 in 2013, and Paystack remained the most popular payment alternative given that it was included in late 2017.

Paystack was established by 2 Nigerian computer system science graduates, Shola Akinlade and Ezra Olubi, who got early phase funding in Silicon Valley's Y-Combinator programme.

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

Paystack stated it makes it possible for payments for a variety of sports betting companies but also a vast array of organizations, from energy services to transport business to insurer Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is also backed by the Y-Combinator program as well as endeavor 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 coincided with the arrival of foreign investors wishing to take advantage of sports betting.

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

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

NairaBET's Alabi stated its sales were split between stores and online however the ease of electronic payments, cost of running stores and ability for consumers to avoid the stigma of gambling 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 lots of customers still remain hesitant to invest online.

He said the company, with about 60 percent of Nigeria's sports betting market, had an extensive network. Nigerian sports betting stores frequently serve as social centers where customers can watch soccer free of charge while placing bets.

At a BetKing hall deep inside the dynamic Oshodi market in Lagos, lots of soccer fans gathered to view 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 TV screen inside. He said he began sports betting 3 months ago and bets as much as 1,000 naira a day.

"Since I have actually been playing I have not won anything but I think 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)