By Alexis Akwagyiram and Didi Akinyelure

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

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

Fear of electronic scams and sluggish web speeds have actually held Nigerian online customers back but sports betting companies states the new, fast digital payment systems underpinning their websites are altering mindsets towards online deals.

"We have actually seen significant development in the number of payment solutions that are offered. All that is absolutely altering the gaming space," said Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria's industrial capital.

"The operators will go with whoever is quicker, whoever can link to their platform with less concerns and problems," he said, adding that taxes from sports betting wagering in Lagos State rose 30 percent to 40 percent in 2017 from 2016.

That growth 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 central 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 very first quarter of 2018 there were nearly 10 million worth 61 billion.

With a young population of nearly 190 million, rising smart phone use and falling data costs, Nigeria has actually long been viewed as an excellent opportunity for online organizations - once customers feel comfy with electronic payments.

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

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

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

FINTECH COMPETITION

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

Paystack and another local startup Flutterwave, both founded in 2016, are providing competition for Nigeria's Interswitch which was set up in 2002 and was the main platform utilized by organizations running in Nigeria.

"We included Paystack as one of our payment alternatives with no excitement, without revealing to our consumers, and within a month it soared to the primary most pre-owned payment alternative on the site," stated Akin Alabi, creator of NairabBET.

He said NairaBET, the nation's second greatest sports betting company, now had 2 million regular clients on its website, up from 500,000 in 2013, and Paystack remained the most popular payment alternative given that it was included late 2017.

Paystack was set up by two Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who got early phase 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 mad Ikeja district of Lagos, said the variety of 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 said an environment of developers had emerged around Paystack, creating software application to incorporate the platform into websites. "We have seen a growth in that neighborhood and they have actually brought us along," said Quartey.

Paystack stated it enables payments for a number of wagering companies however likewise a broad variety of services, from utility services to transfer companies to insurance provider 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 coincided with the arrival of foreign financiers intending to use sports betting wagering.

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

Russia's 1XBet and Slovakia's DOXXbet have actually both established in Nigeria in the last 2 years while Italy's Goldbet was ahead of the pattern, taking a half stake in market leader Bet9ja when the Nigerian company introduced 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 prevent the stigma of gaming in public meant online deals would grow.

But despite advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was necessary to have a shop network, not least since numerous consumers still stay reluctant to invest online.

He said the company, with about 60 percent of Nigeria's sports betting market, had an extensive network. Nigerian wagering stores frequently function as social centers where customers can watch soccer free of charge while positioning bets.

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

Richard Onuka, a factory worker who earns 25,000 naira a month, was focused on a television screen inside. He said he began gambling 3 months back and bets approximately 1,000 naira a day.

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