By Alexis Akwagyiram and Didi Akinyelure

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

For many 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 cultivated a culture of cashless payments.

Fear of electronic scams and sluggish web speeds have actually held Nigerian online consumers back but wagering companies says the new, fast digital payment systems underpinning their websites are altering mindsets towards online transactions.

"We have seen significant growth in the variety of payment solutions that are readily available. All that is definitely altering the gaming space," said Seun Anibaba, CEO of Lagos State Lotteries Board, gaming regulator in Nigeria's business capital.

"The operators will choose whoever is faster, whoever can connect to their platform with less issues and glitches," he stated, 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 an increase 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 nearly 10 million worth 61 billion.

With a young population of nearly 190 million, rising mobile phone use and falling data costs, Nigeria has long been seen as an excellent chance for online organizations - once customers feel comfy with electronic payments.

Online gambling firms say that is happening, though reaching the tens of countless Nigerians without access to banking services remains a challenge for pure online retailers.

British online sports betting firm 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 market is going," Betway's Nigeria supervisor Lere Awokoya said.

"The development in the number of fintechs, and the federal government as an enabler, has actually helped the service to flourish. These technological shifts encouraged Betway to begin operating in Nigeria," he stated.

FINTECH COMPETITION

sports betting firms capitalizing the soccer frenzy whipped up by Nigeria's involvement on the planet Cup say they are discovering the payment systems produced by regional start-ups such as Paystack are proving popular online.

Paystack and another local startup Flutterwave, both founded in 2016, are providing competition for Nigeria's Interswitch which was established in 2002 and was the main platform used by businesses running in Nigeria.

"We added Paystack as one of our payment options without any excitement, without announcing to our consumers, and within a month it shot up to the primary most secondhand payment alternative on the website," stated Akin Alabi, creator of NairabBET.

He stated NairaBET, the nation's second most significant sports betting company, now had 2 million regular clients on its site, up from 500,000 in 2013, and Paystack remained the most popular payment choice since it was included late 2017.

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

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

Paystack, based in the frenetic 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 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," said Emmanuel Quartey, Paystack's head of development.

He said an ecosystem of designers had actually emerged around Paystack, developing software application to integrate the platform into sites. "We have actually seen a development in that community and they have brought us along," said Quartey.

Paystack stated it makes it possible for payments for a variety of sports betting companies but also a large range of organizations, from utility services to transfer business to insurance provider Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is likewise 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 use sports betting.

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

Russia's 1XBet and Slovakia's DOXXbet have both set up in Nigeria in the last two years while Italy's Goldbet was ahead of the trend, taking a half stake in market leader Bet9ja when the Nigerian company launched in 2015.

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

But regardless of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was very important to have a store network, not least due to the fact that lots of clients still stay hesitant to spend online.

He stated the company, with about 60 percent of Nigeria's sports betting wagering market, had a substantial network. Nigerian sports betting stores frequently function as social hubs where customers can see soccer complimentary of charge while positioning bets.

At a BetKing hall deep inside the busy Oshodi market in Lagos, lots of soccer fans collected to enjoy Nigeria's final warm 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 sports betting three months ago and bets up to 1,000 naira a day.

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