By Alexis Akwagyiram and Didi Akinyelure

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

For years, mobile payments stopped working 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 scams and sluggish web speeds have actually held Nigerian online customers back however sports betting companies says the brand-new, fast digital payment systems underpinning their sites are altering attitudes towards online transactions.

"We have seen substantial development in the variety of payment solutions that are available. All that is absolutely altering the gaming space," stated Seun Anibaba, CEO of Lagos State Lotteries Board, gaming regulator in Nigeria's business capital.

"The operators will go with whoever is quicker, whoever can connect to their platform with less problems and glitches," he said, including that taxes from sports betting wagering 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 information 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 leapt 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 nearly 190 million, increasing cellphone usage and falling information costs, Nigeria has actually long been seen as a terrific chance for online organizations - once customers feel comfy with electronic payments.

Online gambling companies state that is taking place, though reaching the tens of countless Nigerians without access to banking services remains a difficulty for pure online sellers.

British online wagering company Betway opened its very first African business in Kenya in 2015, followed by Uganda, Ghana and South Africa. It launched in Nigeria in January.

"There is a gradual shift to online now, that is where the industry is going," Betway's Nigeria manager Lere Awokoya stated.

"The growth in the variety of fintechs, and the federal government as an enabler, has helped business to flourish. These technological shifts motivated Betway to begin operating in Nigeria," he stated.

FINTECH COMPETITION

sports betting companies capitalizing the soccer craze whipped up by Nigeria's involvement in the World Cup say they are finding the payment systems created by local start-ups such as Paystack are showing popular online.

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

"We added Paystack as one of our payment options with no fanfare, without announcing to our clients, and within a month it shot up to the top most pre-owned payment option on the site," stated Akin Alabi, creator of NairabBET.

He stated NairaBET, the country's 2nd greatest 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 considering that it was included late 2017.

Paystack was established by two Nigerian computer system science graduates, Shola Akinlade and Ezra Olubi, who got 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, stated the variety 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," stated Emmanuel Quartey, Paystack's head of growth.

He stated an ecosystem of developers had actually emerged around Paystack, developing software to incorporate the platform into sites. "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 wagering companies but also a wide variety of businesses, from energy services to carry business to insurance company Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is also backed by the Y-Combinator program in addition to 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 financiers wanting to use sports betting wagering.

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

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

NairaBET's Alabi said its sales were split in between stores and online however the ease of electronic payments, expense of running shops and ability for clients to avoid the stigma of sports betting in public indicated online deals would grow.

But despite advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was crucial to have a store network, not least due to the fact that lots of customers still remain hesitant to spend online.

He stated the company, with about 60 percent of Nigeria's sports betting market, had a comprehensive network. Nigerian wagering shops frequently act as social centers where customers can enjoy soccer free of charge while putting bets.

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

Richard Onuka, a factory employee who makes 25,000 naira a month, was focused on a TV screen inside. He said he started gambling three months ago and bets as much as 1,000 naira a day.

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