By Alexis Akwagyiram and Didi Akinyelure

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

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

Fear of electronic fraud and sluggish web speeds have held Nigerian online customers back but wagering firms states the new, fast digital payment systems underpinning their websites are changing mindsets towards online deals.

"We have actually seen significant development in the number of payment solutions that are readily available. All that is certainly changing the video gaming area," stated Seun Anibaba, CEO of Lagos State Lotteries Board, 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 information 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 nearly 190 million, rising mobile phone use and falling information expenses, Nigeria has actually long been viewed as a fantastic chance for online businesses - once customers feel comfy with electronic payments.

Online gambling companies state that is taking place, though reaching the 10s of millions of Nigerians without access to banking services remains a challenge for pure online merchants.

British online wagering company 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 gradual shift to online now, that is where the market is going," Betway's Nigeria supervisor Lere Awokoya stated.

"The growth in the variety of fintechs, and the federal government as an enabler, has actually assisted business to thrive. These technological shifts motivated Betway to start operating in Nigeria," he said.

FINTECH COMPETITION

sports betting companies cashing in on the soccer frenzy whipped up by Nigeria's involvement worldwide Cup say they are finding the payment systems developed by regional startups such as Paystack are showing popular online.

Paystack and another local startup Flutterwave, both established in 2016, are providing competitors for Nigeria's Interswitch which was established in 2002 and was the main platform utilized by services running in Nigeria.

"We included Paystack as one of our payment alternatives without any excitement, without announcing to our customers, and within a month it shot up to the number one most pre-owned payment choice on the site," said Akin Alabi, founder of NairabBET.

He said NairaBET, the country's 2nd most significant sports betting firm, now had 2 million routine consumers 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 set up by 2 Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who got early phase financing in Silicon Valley's Y-Combinator programme.

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 frenetic Ikeja district of Lagos, stated the number of regular monthly deals 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 month," said Emmanuel Quartey, Paystack's head of growth.

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

Paystack stated it makes it possible for payments for a number of sports betting companies however also a wide variety of businesses, from energy services to carry companies to insurer Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is likewise 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 take advantage of sports betting wagering.

Industry professionals say the sector produces about $1 billion a year and is most likely to grow faster than in South Africa and Kenya where the service is more developed.

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

NairaBET's Alabi stated its sales were split in between stores and online but the ease of electronic payments, cost of running shops and capability for clients to prevent the stigma of gaming in public suggested online transactions would grow.

But in spite of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was necessary to have a store network, not least due to the fact that many clients still remain unwilling to spend online.

He stated the company, with about 60 percent of Nigeria's sports betting market, had a comprehensive network. Nigerian sports betting shops typically serve as social hubs where consumers can enjoy soccer complimentary of charge while putting bets.

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

Richard Onuka, a factory worker who earns 25,000 naira a month, was fixated on a television screen inside. He stated he started gambling three months ago and bets up to 1,000 naira a day.

"Since I have been playing I have not won anything but 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)