By Alexis Akwagyiram and Didi Akinyelure

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

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

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

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

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

That growth has actually 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 an overall 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 cellphone use and falling data costs, Nigeria has long been seen as an excellent opportunity for online companies - once customers feel comfy with electronic payments.

Online sports betting firms say that is happening, though reaching the tens of millions of Nigerians without access to banking services stays an obstacle for pure online merchants.

British online wagering company Betway opened its very first African organization 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 industry 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 organization to prosper. These technological shifts motivated Betway to begin operating in Nigeria," he stated.

FINTECH COMPETITION

sports betting firms capitalizing the soccer frenzy worked up by Nigeria's participation on the planet Cup state they are discovering the payment systems developed by regional startups such as Paystack are showing popular online.

Paystack and another regional startup Flutterwave, both founded in 2016, are supplying competition for Nigeria's Interswitch which was established in 2002 and was the primary platform used by services running in Nigeria.

"We included Paystack as one of our payment options with no excitement, without announcing to our customers, and within a month it soared to the number one most pre-owned payment option on the website," stated Akin Alabi, creator of NairabBET.

He stated NairaBET, the country's second most significant sports betting company, now had 2 million regular customers on its website, up from 500,000 in 2013, and Paystack remained the most popular payment option 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 funding in Silicon Valley's Y-Combinator programme.

In December 2016, it raised $1.3 million from investors including 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 each and every single month," said Emmanuel Quartey, Paystack's head of growth.

He said an ecosystem of developers had actually emerged around Paystack, creating software application to integrate the platform into sites. "We have actually seen a growth because community and they have carried us along," said Quartey.

Paystack stated it allows payments for a variety of sports betting companies however also a wide variety of services, from utility services to transport business to insurance provider Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator programme along with endeavor 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 actually corresponded with the arrival of foreign investors hoping to use sports betting.

Industry professionals say the sector creates 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 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 firm released in 2015.

NairaBET's Alabi stated its sales were split in between shops and online however the ease of electronic payments, expense of running stores and ability for clients to avoid the preconception of gaming in public suggested online transactions would grow.

But regardless of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was very important to have a shop network, not least due to the fact that many customers still stay hesitant to invest online.

He said the company, with about 60 percent of Nigeria's sports betting wagering market, had a comprehensive network. Nigerian sports betting stores often function as social hubs where consumers can view soccer free of charge while positioning bets.

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

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

"Since I have actually 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; modifying by David Clarke)