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 starting to make online services more viable.

For years, mobile payments failed to take off 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 sluggish internet speeds have actually held Nigerian online customers back however sports betting companies states the new, quick digital payment systems underpinning their websites are changing mindsets towards online deals.

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

"The operators will opt for whoever is much faster, whoever can connect to their platform with less issues and problems," he said, including that taxes from sports betting in Lagos State rose 30 percent to 40 percent in 2017 from 2016.

That development 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 certified 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, increasing smart phone use and falling information expenses, Nigeria has long been viewed as a great chance for online organizations - once customers feel comfy with electronic payments.

Online gaming companies say that is taking place, though reaching the 10s of countless Nigerians without access to banking services remains a difficulty for pure online merchants.

British online sports betting firm Betway opened its first African company in Kenya in 2015, followed by Uganda, Ghana and South Africa. It released 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 said.

"The development in the number of fintechs, and the government as an enabler, has actually helped the business to flourish. These technological shifts encouraged Betway to begin operating in Nigeria," he said.

FINTECH COMPETITION

sports betting firms capitalizing the soccer craze whipped up by Nigeria's involvement in the World Cup say they are finding the payment systems developed by local startups such as Paystack are showing popular online.

Paystack and another regional start-up Flutterwave, both founded in 2016, are providing competitors for Nigeria's Interswitch which was set up in 2002 and was the main platform used by businesses operating in Nigeria.

"We added Paystack as one of our payment alternatives without any excitement, without revealing to our clients, and within a month it soared to the top most secondhand payment choice on the site," said Akin Alabi, creator of NairabBET.

He said NairaBET, the nation's second biggest 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 considering that it was included late 2017.

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

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 mad Ikeja district of Lagos, stated the variety of 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," stated Emmanuel Quartey, Paystack's head of development.

He stated an ecosystem of designers had emerged around Paystack, creating software application to incorporate the platform into sites. "We have seen a development in that neighborhood and they have carried us along," stated Quartey.

Paystack said it allows payments for a number of wagering firms but also a vast array of organizations, from energy services to transport business to insurance company 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 accompanied the arrival of foreign investors wishing to tap into sports betting.

Industry experts say the sector creates about $1 billion a year and is 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 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 released in 2015.

NairaBET's Alabi stated its sales were divided between shops and online but the ease of electronic payments, cost of running shops and ability for clients to avoid the preconception of gaming in public suggested online deals would grow.

But regardless of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was essential to have a store network, not least because numerous consumers still remain reluctant to spend online.

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

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

Richard Onuka, a factory worker who earns 25,000 naira a month, was focused on a television screen inside. He said he began sports betting three months ago and bets as much as 1,000 naira a day.

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