By Alexis Akwagyiram and Didi Akinyelure

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

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

Fear of electronic scams and sluggish internet speeds have held Nigerian online consumers back but sports betting firms states the new, fast digital payment systems underpinning their websites are altering attitudes towards online deals.

"We have seen substantial growth in the number of payment options that are offered. All that is definitely changing the video gaming space," said 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 issues and problems," he stated, adding that taxes from sports betting wagering in Lagos State increased 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 certified banks.

In 2016, there were 14 million web payments worth an overall 132 billion naira ($420 million). Transactions leapt 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 almost 190 million, increasing mobile phone usage and falling data costs, Nigeria has actually long been seen as a terrific opportunity for online organizations - once customers feel comfy with electronic payments.

Online gaming firms say that is happening, though reaching the 10s of millions of Nigerians without access to banking services remains a difficulty for pure online sellers.

British online sports betting firm 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 said.

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

FINTECH COMPETITION

sports betting firms capitalizing the soccer craze worked up by Nigeria's involvement on the planet Cup state they are finding the payment systems produced by local start-ups such as Paystack are proving popular online.

Paystack and another regional startup Flutterwave, both founded in 2016, are offering competitors for Nigeria's Interswitch which was established in 2002 and was the main platform used by businesses running in Nigeria.

"We included Paystack as one of our payment alternatives without any excitement, without revealing to our consumers, and within a month it soared to the primary most used payment option on the website," said Akin Alabi, creator of NairabBET.

He stated NairaBET, the country's 2nd biggest sports betting firm, now had 2 million regular customers on its website, up from 500,000 in 2013, and Paystack remained the most popular payment alternative considering that it was included in late 2017.

Paystack was set up by 2 Nigerian computer science graduates, Shola Akinlade and Ezra Olubi, who received early stage funding in Silicon Valley's Y-Combinator program.

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, said the number of month-to-month transactions 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 each and every single month," said Emmanuel Quartey, Paystack's head of development.

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

Paystack said it makes it possible for payments for a variety of wagering firms however likewise a large range of companies, from utility services to transport 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 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 corresponded with the arrival of foreign financiers hoping to tap into sports betting wagering.

Industry professionals say the sector generates about $1 billion a year and is likely to grow faster than in South Africa and Kenya where business 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 pattern, taking a 50 percent stake in market leader Bet9ja when the Nigerian company launched in 2015.

NairaBET's Alabi stated its sales were divided between stores and online but the ease of electronic payments, cost of running stores and ability for clients to prevent the stigma of sports betting in public meant 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 due to the fact that many consumers still remain reluctant to spend online.

He said the company, with about 60 percent of Nigeria's sports betting market, had a comprehensive network. Nigerian wagering stores frequently function as social centers where customers can view soccer complimentary of charge while putting bets.

At a BetKing hall deep inside the dynamic Oshodi market in Lagos, dozens of soccer fans gathered to enjoy Nigeria's final warm up game before the World Cup.

Richard Onuka, a factory worker who makes 25,000 naira a month, was focused on a TV screen inside. He said he began sports betting three months ago and bets up to 1,000 naira a day.

"Since I have actually been playing I have actually not won anything however I think 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)