By Alexis Akwagyiram and Didi Akinyelure

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

For many 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 says the brand-new, fast digital payment systems underpinning their websites are changing attitudes towards online deals.

"We have actually seen significant development in the number of payment services that are available. All that is absolutely changing the gaming area," stated Seun Anibaba, CEO of Lagos State Lotteries Board, gaming regulator in Nigeria's industrial capital.

"The operators will go with whoever is faster, whoever can link to their platform with less issues and glitches," he said, adding that taxes from sports betting wagering in Lagos State increased 30 percent to 40 percent in 2017 from 2016.

That development has been matched by an increase in web payments, according to information from the Nigeria Inter-Bank Settlement System (NIBSS), which is owned by the central 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 almost 10 million worth 61 billion.

With a young population of almost 190 million, increasing cellphone use and falling information costs, Nigeria has actually long been viewed as a great chance for online services - once customers feel comfortable with electronic payments.

Online gambling firms say that is happening, though reaching the 10s of countless Nigerians without access to banking services remains an obstacle 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 released in Nigeria in January.

"There is a steady shift to online now, that is where the industry is going," Betway's Nigeria supervisor Lere Awokoya said.

"The development in the number of fintechs, and the government as an enabler, has assisted the company to prosper. These technological shifts motivated Betway to start operating in Nigeria," he stated.

FINTECH COMPETITION

sports betting firms cashing in on the soccer craze whipped up by Nigeria's participation worldwide Cup say they are finding the payment systems developed by local start-ups such as Paystack are showing popular online.

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

"We included Paystack as one of our payment alternatives with no excitement, without announcing to our consumers, and within a month it shot up to the top most used payment choice on the website," stated Akin Alabi, founder of NairabBET.

He said NairaBET, the nation's second biggest wagering firm, now had 2 million routine customers on its website, up from 500,000 in 2013, and Paystack stayed the most popular payment option because it was included late 2017.

Paystack was set up by 2 Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who got early phase funding in Silicon Valley's Y-Combinator programme.

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

Paystack, based in the mad Ikeja district of Lagos, said the variety of monthly transactions it processed increased 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 every month," said Emmanuel Quartey, Paystack's head of growth.

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

Paystack said it enables payments for a variety of sports betting firms but also a large range of businesses, from utility services to transfer companies to insurance company Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is also backed by the Y-Combinator programme 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 actually accompanied the arrival of foreign investors intending to tap into sports betting wagering.

Industry specialists say the sector creates 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 2 years while Italy's Goldbet led the pattern, taking a half stake in market leader Bet9ja when the Nigerian firm launched in 2015.

NairaBET's Alabi stated its sales were split between shops and online however the ease of electronic payments, cost of running shops and ability for consumers to avoid the stigma of gambling in public implied online deals would grow.

But despite advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was essential to have a shop network, not least due to the fact that lots of clients still stay unwilling to invest online.

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

At a BetKing hall deep inside the busy Oshodi market in Lagos, lots of soccer fans collected to view Nigeria's last heat up 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 stated he began sports betting 3 months earlier and bets as much as 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; editing by David Clarke)