By Alexis Akwagyiram and Didi Akinyelure

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

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

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

"We have seen substantial growth in the variety of payment solutions that are offered. All that is absolutely changing the gaming space," stated Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria's commercial capital.

"The operators will go with whoever is faster, whoever can connect to their platform with less issues 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 certified banks.

In 2016, there were 14 million web payments worth an overall 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 actually long been seen as a great chance for online businesses - once consumers feel comfortable with electronic payments.

Online gambling firms state that is taking place, though reaching the tens of millions of Nigerians without access to banking services remains an obstacle for pure online retailers.

British online wagering company Betway opened its 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 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 helped the organization to grow. These technological shifts encouraged Betway to begin operating in Nigeria," he stated.

FINTECH COMPETITION

sports betting companies cashing in on the soccer frenzy whipped up by Nigeria's involvement in the World Cup state they are finding the payment systems produced by regional startups 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 set up in 2002 and was the main platform used by services running in Nigeria.

"We added Paystack as one of our payment options without any excitement, without revealing to our consumers, and within a month it shot up to the top most used payment alternative on the website," stated Akin Alabi, creator of NairabBET.

He stated NairaBET, the nation's 2nd most significant wagering firm, now had 2 million routine consumers on its website, up from 500,000 in 2013, and Paystack remained the most popular payment alternative since it was included late 2017.

Paystack was established by 2 Nigerian computer technology 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 consisting of China's Tencent and Comcast Ventures in the United States.

Paystack, based in the mad Ikeja district of Lagos, stated the variety of regular monthly transactions 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," stated Emmanuel Quartey, Paystack's head of growth.

He stated a community of developers had actually emerged around Paystack, developing software application to integrate the platform into websites. "We have seen a development because community and they have actually carried us along," stated Quartey.

Paystack stated it enables payments for a variety of wagering companies however also a vast array of companies, from utility services to transport companies to insurance company Axa Mansard.

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

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

Russia's 1XBet and Slovakia's DOXXbet have both established in Nigeria in the last 2 years while Italy's Goldbet led the pattern, taking a 50 percent stake in market leader Bet9ja when the Nigerian firm released in 2015.

NairaBET's Alabi said its sales were divided between stores and online but the ease of electronic payments, cost of running stores and ability for consumers to prevent the stigma of gambling in public indicated 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 shop network, not least due to the fact that numerous customers still stay unwilling to spend online.

He said the business, with about 60 percent of Nigeria's sports betting wagering market, had an extensive network. Nigerian sports betting shops frequently serve as social hubs where customers can view soccer totally free of charge while placing bets.

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

Richard Onuka, a factory worker who makes 25,000 naira a month, was fixated on a TV screen inside. He stated he started gambling 3 months ago and bets approximately 1,000 naira a day.

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