By Alexis Akwagyiram and Didi Akinyelure

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

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 fraud and slow internet speeds have held Nigerian online consumers back but sports betting companies states the new, quick digital payment systems underpinning their websites are altering attitudes towards online transactions.

"We have seen substantial growth in the number of payment options that are readily available. All that is certainly changing the video gaming space," 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 link to their platform with less issues and glitches," he stated, adding that taxes from sports betting wagering in Lagos State rose 30 percent to 40 percent in 2017 from 2016.

That growth has been matched by an increase in web payments, according to data 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 an overall 132 billion naira ($420 million). Transactions leapt 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 almost 190 million, increasing mobile phone usage and falling data costs, Nigeria has actually long been viewed as a fantastic chance for online organizations - once customers feel comfy with electronic payments.

Online gambling firms state that is happening, though reaching the tens of millions of Nigerians without access to banking services stays a challenge for pure online merchants.

British online sports betting company Betway opened its first African organization in Kenya in 2015, followed by Uganda, Ghana and South Africa. It launched 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 actually assisted the service to thrive. These technological shifts motivated Betway to begin operating in Nigeria," he said.

FINTECH COMPETITION

sports betting companies capitalizing the soccer frenzy worked up by Nigeria's participation worldwide Cup say they are discovering the payment systems developed by regional start-ups such as Paystack are showing popular online.

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

"We included Paystack as one of our payment alternatives without any excitement, without revealing to our customers, and within a month it soared to the top most secondhand payment choice on the site," stated Akin Alabi, creator of NairabBET.

He said NairaBET, the country's second most significant wagering firm, now had 2 million routine consumers on its site, up from 500,000 in 2013, and Paystack stayed the most popular payment option considering that it was added in late 2017.

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

In December 2016, it raised $1.3 million from financiers including 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 every single month," stated Emmanuel Quartey, Paystack's head of development.

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

Paystack said it allows payments for a number of sports betting companies however also a wide variety of companies, from energy services to transport companies to insurance company Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator program along with 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 accompanied the arrival of foreign financiers wishing to tap into sports betting wagering.

Industry experts say the sector produces 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 set up in Nigeria in the last two years while Italy's Goldbet was ahead of the pattern, taking a 50 percent stake in market leader Bet9ja when the Nigerian firm launched in 2015.

NairaBET's Alabi said its sales were divided in between stores and online but the ease of electronic payments, expense of running shops and ability for consumers to prevent the stigma of gaming in public meant online deals would grow.

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

He said the company, with about 60 percent of Nigeria's sports betting market, had a substantial network. Nigerian wagering shops often function as social centers where consumers can watch soccer complimentary of charge while positioning bets.

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

Richard Onuka, a factory employee who earns 25,000 naira a month, was focused on a TV screen inside. He stated he began sports betting 3 months earlier and bets as much as 1,000 naira a day.

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