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 beginning to make online services 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 scams and slow web speeds have held Nigerian online consumers back but sports betting companies says the brand-new, fast digital payment systems underpinning their sites are altering attitudes towards online deals.

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

"The operators will opt for whoever is quicker, whoever can link to their platform with less concerns and problems," he stated, adding 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 information 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 almost 10 million worth 61 billion.

With a young population of almost 190 million, rising mobile phone use and falling information expenses, Nigeria has long been seen as a great chance for online services - once customers feel comfortable with electronic payments.

Online gaming companies state that is taking place, though reaching the tens of countless Nigerians without access to banking services remains a difficulty for pure online retailers.

British online wagering firm Betway opened its very first African company in Kenya in 2015, followed by Uganda, Ghana and South Africa. It launched in Nigeria in January.

"There is a steady shift to online now, that is where the market is going," Betway's Nigeria manager Lere Awokoya stated.

"The development in the variety of fintechs, and the government as an enabler, has actually assisted business to thrive. These technological shifts motivated Betway to start operating in Nigeria," he stated.

FINTECH COMPETITION

sports betting companies capitalizing the soccer frenzy worked up by Nigeria's involvement worldwide Cup say they are discovering the payment systems created by local startups such as Paystack are proving popular online.

Paystack and another local startup Flutterwave, both established in 2016, are offering competition for Nigeria's Interswitch which was established in 2002 and was the primary platform utilized by services running in Nigeria.

"We included Paystack as one of our payment choices without any excitement, without announcing to our customers, and within a month it soared to the top most secondhand payment alternative on the site," said Akin Alabi, founder of NairabBET.

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

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

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

Paystack, based in the frenetic Ikeja district of Lagos, stated the number of regular monthly deals it processed increased from about 8,000 in early 2016 to more than 900,000 as of 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 development.

He said an environment of designers had actually emerged around Paystack, developing software to incorporate the platform into websites. "We have seen a growth because neighborhood and they have brought us along," said Quartey.

Paystack said it allows payments for a variety of wagering companies but likewise a large range of businesses, from utility services to carry companies to insurer Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is also backed by the Y-Combinator program in addition to 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 coincided with the arrival of foreign financiers wishing to tap into sports betting.

Industry experts say the sector generates about $1 billion a year and is likely to grow faster than in South Africa and Kenya where the service is more developed.

Russia's 1XBet and Slovakia's DOXXbet have both set up in Nigeria in the last 2 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 said its sales were divided between stores and online but the ease of electronic payments, cost of running shops and capability for consumers to avoid the stigma of gaming in public meant online deals would grow.

But in spite of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was very important to have a store network, not least due to the fact that many customers still stay unwilling to invest online.

He stated the company, with about 60 percent of Nigeria's sports betting market, had a substantial network. Nigerian sports betting shops often serve as social hubs where consumers can enjoy soccer totally free of charge while positioning bets.

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

Richard Onuka, a factory employee who earns 25,000 naira a month, was fixated on a TV screen inside. He said he began gambling 3 months ago 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; editing by David Clarke)