By Alexis Akwagyiram and Didi Akinyelure

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

For several 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 cultivated a culture of cashless payments.

Fear of electronic scams and sluggish web speeds have actually held Nigerian online consumers back however wagering companies says the brand-new, quick digital payment systems underpinning their sites are changing mindsets towards online deals.

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

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

That growth 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 reserve bank and licensed 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 almost 190 million, increasing cellphone use and falling information expenses, Nigeria has actually long been viewed as a great opportunity for online services - once consumers feel comfortable with electronic payments.

Online gambling firms state that is taking place, though reaching the tens of millions of Nigerians without access to banking services stays an obstacle for pure online retailers.

British online sports betting firm Betway opened its first African company 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 industry is going," Betway's Nigeria supervisor Lere Awokoya stated.

"The growth in the number of fintechs, and the government as an enabler, has helped business to prosper. These technological shifts motivated Betway to start running in Nigeria," he said.

FINTECH COMPETITION

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

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

"We included Paystack as one of our payment choices without any fanfare, without revealing to our customers, and within a month it soared to the number one most secondhand payment option on the website," said Akin Alabi, creator of NairabBET.

He said NairaBET, the country's second most significant sports betting company, now had 2 million routine clients on its site, up from 500,000 in 2013, and Paystack stayed the most popular payment option because it was included 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 program.

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 mad Ikeja district of Lagos, stated the variety of month-to-month transactions it processed rose 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 growth.

He said a community of designers had emerged around Paystack, producing software to integrate the platform into websites. "We have seen a growth in that community and they have brought us along," said Quartey.

Paystack said it makes it possible for payments for a number of wagering companies however likewise a wide range of organizations, from utility services to carry business to insurance company Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is also backed by the Y-Combinator program as well as investor 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 corresponded with the arrival of foreign investors hoping to use sports betting wagering.

Industry experts state 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 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 split in between shops and online however the ease of electronic payments, cost of running stores and ability for consumers 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 essential to have a store network, not least due to the fact that numerous clients still remain unwilling to invest online.

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

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

Richard Onuka, a factory worker who makes 25,000 naira a month, was fixated on a television screen inside. He stated he began sports betting 3 months ago and bets approximately 1,000 naira a day.

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