By Alexis Akwagyiram and Didi Akinyelure

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

For many 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 fostered a culture of cashless payments.

Fear of electronic fraud and sluggish internet speeds have actually held Nigerian online customers back but wagering firms says the new, fast digital payment systems underpinning their sites are altering attitudes towards online deals.

"We have seen considerable growth in the variety of payment solutions that are available. All that is certainly changing the gaming area," stated Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria's industrial capital.

"The operators will go with whoever is much faster, whoever can connect to their platform with less problems and problems," he stated, including that taxes from sports betting wagering in Lagos State increased 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 main bank and licensed banks.

In 2016, there were 14 million web payments worth a total 132 billion naira ($420 million). Transactions leapt 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 smart phone usage and falling information expenses, Nigeria has actually long been seen as a fantastic chance for online companies - once consumers feel comfortable with electronic payments.

Online gaming companies say that is taking place, though reaching the 10s of millions of Nigerians without access to banking services stays a challenge for pure online retailers.

British online sports betting company Betway opened its very first African business 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 manager Lere Awokoya stated.

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

FINTECH COMPETITION

sports betting companies capitalizing the soccer frenzy worked up by Nigeria's participation in the World Cup state they are finding the payment systems created by regional startups such as Paystack are showing popular online.

Paystack and another regional start-up Flutterwave, both founded in 2016, are supplying competitors for Nigeria's Interswitch which was set up in 2002 and was the main platform used by companies running in Nigeria.

"We included Paystack as one of our payment options with no excitement, without revealing to our consumers, and within a month it shot up to the top most used payment choice on the website," stated Akin Alabi, founder of NairabBET.

He said NairaBET, the country'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 choice since it was included late 2017.

Paystack was set up by two Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who received early stage funding in Silicon Valley's Y-Combinator program.

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 frenetic Ikeja district of Lagos, said the number 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 every month," said Emmanuel Quartey, Paystack's head of development.

He stated an environment of designers had actually emerged around Paystack, creating software to integrate the platform into websites. "We have actually seen a development because community and they have actually carried us along," stated Quartey.

Paystack stated it enables payments for a variety of wagering firms however likewise a wide variety of businesses, from energy services to transport business to insurer Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator programme along with investor 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 intending to use sports betting.

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

NairaBET's Alabi said its sales were divided in between shops and online but the ease of electronic payments, cost of running shops and capability for customers to prevent the preconception of gambling in public indicated online transactions would grow.

But in spite of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was essential to have a store network, not least since numerous consumers still remain hesitant to spend online.

He said the business, with about 60 percent of Nigeria's sports betting market, had a substantial network. Nigerian wagering stores often act as social centers where clients can watch soccer complimentary of charge while placing bets.

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

"Since I have been playing I have not won anything but I believe 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)