By Alexis Akwagyiram and Didi Akinyelure

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

For several years, mobile payments failed to remove in Nigeria as they have in countries such as Kenya, where Safaricom's M-Pesa cash transfers have cultivated a culture of cashless payments.

Fear of electronic fraud and sluggish internet speeds have held Nigerian online customers back however wagering companies says the new, fast digital payment systems underpinning their websites are altering mindsets towards online transactions.

"We have actually seen considerable growth in the number of payment solutions that are readily available. All that is absolutely changing the gaming area," stated Seun Anibaba, CEO of Lagos State Lotteries Board, gaming regulator in Nigeria's commercial capital.

"The operators will opt for whoever is much faster, whoever can connect to their platform with less concerns and glitches," 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 certified 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 nearly 10 million worth 61 billion.

With a young population of nearly 190 million, rising smart phone use and falling data expenses, Nigeria has long been seen as an excellent chance for online services - once consumers feel comfortable with electronic payments.

Online gambling companies state that is occurring, though reaching the tens of millions of Nigerians without access to banking services stays a difficulty for pure online merchants.

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

"There is a gradual shift to online now, that is where the industry is going," Betway's Nigeria manager Lere Awokoya said.

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

FINTECH COMPETITION

sports betting companies capitalizing the soccer craze worked up by Nigeria's involvement worldwide Cup state they are discovering the payment systems created by regional start-ups such as Paystack are showing popular online.

Paystack and another regional startup Flutterwave, both founded in 2016, are supplying competitors for Nigeria's Interswitch which was established in 2002 and was the primary platform used 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 secondhand payment choice on the site," stated Akin Alabi, creator of NairabBET.

He said NairaBET, the country's second biggest wagering company, now had 2 million regular clients on its website, up from 500,000 in 2013, and Paystack stayed the most popular payment option considering that it was included late 2017.

Paystack was established by two Nigerian computer system 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 consisting of China's Tencent and Comcast Ventures in the United States.

Paystack, based in the mad Ikeja district of Lagos, said the number of month-to-month deals 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 every single month," said Emmanuel Quartey, Paystack's head of growth.

He said an ecosystem of designers had actually emerged around Paystack, producing software to incorporate the platform into sites. "We have seen a development because community and they have actually carried us along," stated Quartey.

Paystack said it enables payments for a variety of sports betting companies however also a vast array of businesses, from energy services to transport business to insurance provider Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is also backed by the Y-Combinator programme 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 accompanied the arrival of foreign investors wishing to use sports betting.

Industry experts state 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 two years while Italy's Goldbet was ahead of the trend, taking a half stake in market leader Bet9ja when the Nigerian firm introduced in 2015.

NairaBET's Alabi said its sales were divided between stores and online however the ease of electronic payments, cost of running shops and capability for consumers to prevent the preconception of gaming in public meant online deals would grow.

But regardless of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was very important to have a store network, not least due to the fact that numerous customers still stay unwilling to spend online.

He stated the business, with about 60 percent of Nigeria's sports betting market, had a comprehensive network. Nigerian wagering shops frequently function as social hubs where consumers can see soccer totally free of charge while positioning bets.

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

Richard Onuka, a factory employee who earns 25,000 naira a month, was focused on a TV screen inside. He stated he began sports betting 3 months earlier and bets as much as 1,000 naira a day.

"Since I have actually been playing I have 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; editing by David Clarke)