By Alexis Akwagyiram and Didi Akinyelure

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

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

Fear of electronic scams and sluggish internet speeds have held Nigerian online consumers back however sports betting companies says the brand-new, fast digital payment systems underpinning their sites are changing attitudes towards online transactions.

"We have seen significant growth in the number of payment options that are readily available. All that is definitely altering the video gaming space," said Seun Anibaba, CEO of Lagos State Lotteries Board, gaming regulator in Nigeria's industrial capital.

"The operators will opt for whoever is faster, whoever can connect to their platform with less problems and glitches," he stated, adding that taxes from sports betting wagering in Lagos State increased 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 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 first quarter of 2018 there were nearly 10 million worth 61 billion.

With a young population of almost 190 million, rising mobile phone usage and falling data expenses, Nigeria has actually long been viewed as an excellent chance for online services - once customers feel comfy with electronic payments.

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

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

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

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

FINTECH COMPETITION

sports betting companies cashing in on the soccer craze worked up by Nigeria's participation worldwide Cup say they are finding the payment systems created by regional start-ups such as Paystack are showing popular online.

Paystack and another regional startup Flutterwave, both established in 2016, are supplying competitors for Nigeria's Interswitch which was established in 2002 and was the primary platform utilized by organizations running in Nigeria.

"We included Paystack as one of our payment alternatives without any fanfare, without announcing to our customers, and within a month it soared to the number one most secondhand payment option on the site," said Akin Alabi, founder of NairabBET.

He stated NairaBET, the nation's 2nd biggest sports betting company, now had 2 million regular clients on its website, up from 500,000 in 2013, and Paystack stayed the most popular payment choice since it was included late 2017.

Paystack was established by 2 Nigerian computer system science graduates, Shola Akinlade and Ezra Olubi, who received early phase financing in Silicon Valley's Y-Combinator programme.

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 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 each and every single month," said Emmanuel Quartey, Paystack's head of development.

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

Paystack stated it enables payments for a variety of sports betting firms however also a vast array of businesses, from utility services to transfer companies 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 endeavor capitalists 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 corresponded with the arrival of foreign financiers intending to use sports betting.

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

Russia's 1XBet and Slovakia's DOXXbet have both set up in Nigeria in the last 2 years while Italy's Goldbet led the trend, taking a 50 percent stake in market leader Bet9ja when the Nigerian company launched in 2015.

NairaBET's Alabi said its sales were split between stores and online however the ease of electronic payments, expense of running stores and ability for customers to avoid the stigma of sports betting in public meant online transactions would grow.

But despite advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was essential to have a store network, not least since many clients still remain reluctant to invest online.

He stated the company, with about 60 percent of Nigeria's sports betting market, had a substantial network. Nigerian wagering shops typically function as social centers where customers can see soccer free of charge while placing bets.

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

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

"Since I have been playing I have not won anything but I believe that one day I will win," stated Onuka. ($1 = 314.5000 naira) (Reporting by Alexis Akwagyiram and Didi Akinyelure in Lagos; editing by David Clarke)