By Alexis Akwagyiram and Didi Akinyelure

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

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 cash transfers have actually fostered a culture of cashless payments.

Fear of electronic scams and slow web speeds have actually held Nigerian online consumers back but wagering firms states the new, quick digital payment systems underpinning their websites are altering attitudes towards online deals.

"We have actually seen substantial development in the number of payment services that are available. All that is definitely altering the video 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 quicker, whoever can connect to their platform with less concerns and problems," he stated, including that taxes from sports betting in Lagos State increased 30 percent to 40 percent in 2017 from 2016.

That development has 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 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, rising cellphone usage and falling data expenses, Nigeria has actually long been seen as a terrific chance for online organizations - once customers feel comfy with electronic payments.

Online gaming companies say that is occurring, though reaching the tens of countless Nigerians without access to banking services stays a challenge for pure online sellers.

British online sports betting firm Betway opened its very first African service in Kenya in 2015, followed by Uganda, Ghana and South Africa. It released 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 said.

"The development in the variety of fintechs, and the government as an enabler, has helped business to flourish. These technological shifts motivated 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 say they are finding the payment systems produced by regional start-ups such as Paystack are showing popular online.

Paystack and another local start-up Flutterwave, both founded in 2016, are offering competition for Nigeria's Interswitch which was established in 2002 and was the main platform utilized by organizations operating in Nigeria.

"We added Paystack as one of our payment alternatives with no excitement, without revealing to our customers, and within a month it shot up to the top most used payment choice on the site," said Akin Alabi, creator of NairabBET.

He said NairaBET, the nation's second greatest sports betting firm, now had 2 million routine consumers on its site, up from 500,000 in 2013, and Paystack stayed the most popular payment option since it was included late 2017.

Paystack was set up by two Nigerian computer science graduates, Shola Akinlade and Ezra Olubi, who received early phase funding 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 frenetic Ikeja district of Lagos, said the variety of month-to-month transactions 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 every single month," said Emmanuel Quartey, Paystack's head of development.

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

Paystack said it enables payments for a variety of wagering companies however likewise a broad range of businesses, from energy services to transport business to insurance company Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is also 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 accompanied the arrival of foreign investors intending to use sports betting.

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

Russia's 1XBet and Slovakia's DOXXbet have both established in Nigeria in the last two years while Italy's Goldbet led the pattern, taking a 50 percent 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 ability for customers to avoid the preconception of sports betting in public indicated online deals 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 due to the fact that numerous consumers still stay hesitant to invest online.

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

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

Richard Onuka, a factory employee who makes 25,000 naira a month, was fixated on a television screen inside. He said he began sports betting three months ago and bets up to 1,000 naira a day.

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