By Alexis Akwagyiram and Didi Akinyelure

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

For several years, mobile payments failed to remove in Nigeria as they have in countries such as Kenya, where Safaricom's M-Pesa money transfers have actually fostered a culture of cashless payments.

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

"We have seen substantial development in the number of payment options that are offered. All that is absolutely altering the video gaming area," said Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria's business capital.

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

That development has actually 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 certified 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 nearly 190 million, increasing cellphone use and falling information expenses, Nigeria has long been seen as a terrific chance for online organizations - once consumers feel comfy with electronic payments.

Online betting companies say that is taking place, though reaching the 10s of countless Nigerians without access to banking services stays a difficulty 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 gradual shift to online now, that is where the market is going," Betway's Nigeria supervisor Lere Awokoya said.

"The development in the variety of fintechs, and the government as an enabler, has assisted the organization to flourish. These technological shifts encouraged Betway to start operating in Nigeria," he stated.

FINTECH COMPETITION

sports betting companies cashing in on the soccer craze worked up by Nigeria's involvement worldwide Cup say they are finding the payment systems created by regional startups such as Paystack are proving popular online.

Paystack and another local start-up 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 businesses operating in Nigeria.

"We included Paystack as one of our payment options without any excitement, without revealing to our clients, and within a month it shot up to the top most pre-owned payment option on the website," said Akin Alabi, founder of NairabBET.

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

Paystack was established by two Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who received early stage funding 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 frenetic Ikeja district of Lagos, stated the variety of monthly 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 each and every single month," said Emmanuel Quartey, Paystack's head of development.

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

Paystack stated it allows payments for a variety of wagering firms however likewise a vast array of organizations, from utility services to transfer companies to insurance provider Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur 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 in 2015.

FOREIGN INVESTMENT

Shifts in Nigeria's payment culture have coincided with the arrival of foreign investors wishing to take advantage of sports betting wagering.

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

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 company launched in 2015.

NairaBET's Alabi stated its sales were divided in between shops and online however the ease of electronic payments, cost of running stores and capability for clients to avoid the stigma of gaming in public indicated online deals would grow.

But despite advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was very important to have a store network, not least because lots of consumers still stay hesitant to invest online.

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

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

Richard Onuka, a factory worker who earns 25,000 naira a month, was focused on a TV screen inside. He said he started gambling 3 months back and bets up to 1,000 naira a day.

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