By Alexis Akwagyiram and Didi Akinyelure

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

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 actually promoted a culture of cashless payments.

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

"We have actually seen substantial development in the variety of payment solutions that are available. All that is certainly altering the gaming area," said Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria's commercial capital.

"The operators will opt for whoever is faster, whoever can link to their platform with less problems and glitches," he stated, 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 an increase in web payments, according to data from the Nigeria Inter-Bank Settlement System (NIBSS), which is owned by the central bank and licensed banks.

In 2016, there were 14 million web payments worth a total 132 billion naira ($420 million). Transactions leapt to 29 million worth 185 billion in 2017 and in the 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 data expenses, Nigeria has long been viewed as an excellent opportunity for online companies - once consumers feel comfortable with electronic payments.

Online gambling firms say that is happening, though reaching the tens of millions of Nigerians without access to banking services stays a challenge for pure online sellers.

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

"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 begin running in Nigeria," he stated.

FINTECH COMPETITION

sports betting firms cashing in on the soccer frenzy worked up by Nigeria's participation on the planet Cup say they are discovering the payment systems produced by regional start-ups such as Paystack are showing popular online.

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

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

He said NairaBET, the country's 2nd biggest wagering firm, now had 2 million routine customers on its website, up from 500,000 in 2013, and Paystack remained the most popular payment alternative given that it was added in late 2017.

Paystack was established by 2 Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who received early stage financing in Silicon Valley's Y-Combinator program.

In December 2016, it raised $1.3 million from investors consisting of China's Tencent and Comcast Ventures in the United States.

Paystack, based in the mad Ikeja district of Lagos, said the variety of month-to-month 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," stated Emmanuel Quartey, Paystack's head of growth.

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

Paystack stated it makes it possible for payments for a number of wagering firms but likewise a large range of organizations, from energy 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 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 financiers wishing to take advantage of sports betting wagering.

Industry specialists say 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 established in Nigeria in the last two years while Italy's Goldbet was ahead of the trend, taking a 50 percent 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 however the ease of electronic payments, expense of running shops and ability for consumers to avoid the stigma of sports betting in public indicated online deals would grow.

But in spite of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was crucial to have a store network, not least since numerous customers still stay reluctant to invest online.

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

At a BetKing hall deep inside the dynamic Oshodi market in Lagos, lots of soccer fans gathered to enjoy Nigeria's last heat 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 said he began sports betting 3 months earlier and bets approximately 1,000 naira a day.

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