By Alexis Akwagyiram and Didi Akinyelure

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

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

Fear of electronic fraud and slow web speeds have held Nigerian online consumers back however wagering companies says the brand-new, quick digital payment systems underpinning their websites are changing attitudes towards online transactions.

"We have seen substantial growth in the number of payment solutions that are offered. All that is certainly changing the 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 much faster, whoever can link to their platform with less issues and glitches," he said, including that taxes from sports betting in Lagos State rose 30 percent to 40 percent in 2017 from 2016.

That growth 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 reserve bank and certified 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 almost 10 million worth 61 billion.

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

Online sports betting firms state that is taking place, though reaching the tens of countless Nigerians without access to banking services stays a challenge for pure online retailers.

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

"There is a progressive shift to online now, that is where the industry is going," Betway's Nigeria supervisor Lere Awokoya stated.

"The development in the variety of fintechs, and the federal government as an enabler, has helped the company to grow. These technological shifts motivated Betway to begin operating in Nigeria," he said.

FINTECH COMPETITION

sports betting firms cashing in on the soccer frenzy worked up by Nigeria's involvement in the World Cup state they are discovering the payment systems developed by local startups such as Paystack are showing popular online.

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

"We included Paystack as one of our payment alternatives without any excitement, without announcing to our clients, and within a month it shot up to the number one most secondhand payment option on the site," stated Akin Alabi, founder of NairabBET.

He said NairaBET, the nation's second greatest wagering firm, now had 2 million routine customers on its website, up from 500,000 in 2013, and Paystack remained the most popular payment alternative given that it was added in late 2017.

Paystack was set up by two Nigerian computer system science graduates, Shola Akinlade and Ezra Olubi, who got early phase financing in Silicon Valley's Y-Combinator programme.

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 regular 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," stated Emmanuel Quartey, Paystack's head of growth.

He said a community of developers had actually emerged around Paystack, creating software application to incorporate the platform into websites. "We have seen a development because neighborhood and they have carried us along," said Quartey.

Paystack said it enables payments for a variety of sports betting companies but likewise a broad range of businesses, from energy services to transfer companies to insurance company Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is likewise 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 last year.

FOREIGN INVESTMENT

Shifts in Nigeria's payment culture have actually corresponded with the arrival of foreign financiers hoping to tap into sports betting.

Industry experts say the sector generates about $1 billion a year and is most 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 two years while Italy's Goldbet was ahead of 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 in between stores and online however the ease of electronic payments, expense of running stores and ability for consumers to avoid the stigma of sports betting in public implied online transactions would grow.

But regardless of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was necessary to have a store network, not least because numerous clients still stay hesitant to invest online.

He stated the business, with about 60 percent of Nigeria's sports betting wagering market, had a comprehensive network. Nigerian sports betting stores typically function as social hubs where clients can see soccer complimentary of charge while putting bets.

At a BetKing hall deep inside the busy Oshodi market in Lagos, lots of soccer fans collected to enjoy Nigeria's last warm up 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 stated he began gambling three months earlier and bets approximately 1,000 naira a day.

"Since I have actually 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)