By Alexis Akwagyiram and Didi Akinyelure

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

For many years, mobile payments failed to take off in Nigeria as they have in nations such as Kenya, where Safaricom's M-Pesa cash transfers have actually promoted a culture of cashless payments.

Fear of electronic scams and sluggish web speeds have actually held Nigerian online customers back but wagering companies says the new, quick digital payment systems underpinning their sites are changing attitudes towards online transactions.

"We have seen significant growth in the number of payment solutions that are available. All that is absolutely altering 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 faster, whoever can connect to their platform with less problems and glitches," he said, including that taxes from sports betting in Lagos State increased 30 percent to 40 percent in 2017 from 2016.

That growth has been matched by an increase in web payments, according to data 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 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 almost 190 million, increasing smart phone usage and falling data costs, Nigeria has actually long been seen as a terrific opportunity for online services - once customers feel comfortable with electronic payments.

Online sports betting companies state that is happening, though reaching the 10s of countless Nigerians without access to banking services stays a difficulty for pure online merchants.

British online sports betting company 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 steady shift to online now, that is where the market is going," Betway's Nigeria manager Lere Awokoya stated.

"The development in the number of fintechs, and the government as an enabler, has helped the business to grow. These technological shifts encouraged Betway to begin operating in Nigeria," he said.

FINTECH COMPETITION

sports betting companies capitalizing the soccer craze worked up by Nigeria's participation on the planet Cup state they are finding the payment systems developed by local start-ups such as Paystack are showing popular online.

Paystack and another local startup Flutterwave, both founded in 2016, are offering competitors for Nigeria's Interswitch which was set up in 2002 and was the main platform utilized by businesses 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 soared to the number one most secondhand payment alternative on the website," said Akin Alabi, founder of NairabBET.

He said NairaBET, the country's 2nd greatest sports betting company, now had 2 million routine clients on its website, up from 500,000 in 2013, and Paystack stayed the most popular payment alternative because it was added in late 2017.

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

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

Paystack, based in the mad Ikeja district of Lagos, said the variety of regular monthly transactions it processed rose 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 single month," stated Emmanuel Quartey, Paystack's head of development.

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

Paystack stated it allows payments for a variety of wagering firms but also a vast array of businesses, from utility services to carry business to insurance company Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator program in addition to 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 corresponded with the arrival of foreign financiers wishing to use sports betting wagering.

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

Russia's 1XBet and Slovakia's DOXXbet have actually both set up in Nigeria in the last 2 years while Italy's Goldbet led the pattern, taking a half stake in market leader Bet9ja when the Nigerian company released in 2015.

NairaBET's Alabi stated its sales were divided in between stores and online however the ease of electronic payments, cost of running stores and capability for consumers to prevent the stigma of gaming in public indicated online transactions would grow.

But regardless of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was essential to have a store network, not least since lots of clients still stay reluctant to spend online.

He said the company, with about 60 percent of Nigeria's sports betting wagering market, had a comprehensive network. Nigerian wagering shops frequently act as social centers where consumers can watch soccer free of charge while placing bets.

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

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

"Since I have actually 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)