By Alexis Akwagyiram and Didi Akinyelure

LAGOS, June 25 (Reuters) - Online sports betting wagering is flourishing in soccer-mad Nigeria mostly thanks to payment systems developed by homegrown innovation companies that are beginning to make online organizations 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 cultivated a culture of cashless payments.

Fear of electronic fraud and slow internet speeds have actually held Nigerian online customers back however wagering companies states the brand-new, quick digital payment systems underpinning their sites are changing mindsets towards online deals.

"We have actually seen significant growth in the number of payment services that are readily available. All that is absolutely changing the video gaming space," said Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria's commercial capital.

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

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

With a young population of nearly 190 million, rising cellphone use and falling data expenses, Nigeria has long been viewed as a fantastic opportunity for online businesses - once consumers feel comfy with electronic payments.

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

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

"There is a gradual 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 federal government as an enabler, has helped the organization to grow. These technological shifts encouraged Betway to begin operating in Nigeria," he stated.

FINTECH COMPETITION

sports betting companies cashing in on the soccer frenzy whipped up by Nigeria's participation worldwide Cup state they are discovering the payment systems developed by regional startups such as Paystack are proving popular online.

Paystack and another local start-up Flutterwave, both founded in 2016, are supplying competition for Nigeria's Interswitch which was established in 2002 and was the main platform used by companies running in Nigeria.

"We added Paystack as one of our payment alternatives without any excitement, without revealing to our consumers, and within a month it shot up to the primary most used payment option on the site," stated Akin Alabi, creator of NairabBET.

He stated NairaBET, the country's 2nd biggest sports betting company, now had 2 million regular customers on its website, up from 500,000 in 2013, and Paystack stayed the most popular payment option given that it was added in late 2017.

Paystack was established by 2 Nigerian computer 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 including China's Tencent and Comcast Ventures in the United States.

Paystack, based in the frenetic Ikeja district of Lagos, stated the variety of month-to-month deals it processed increased 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 stated an ecosystem of designers had emerged around Paystack, creating software to incorporate the platform into websites. "We have actually seen a growth because community and they have actually brought us along," said Quartey.

Paystack stated it makes it possible for payments for a number of wagering companies but likewise a vast array of companies, from utility services to transfer companies to insurance provider Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator program along with venture capitalists 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 actually corresponded with the arrival of foreign investors hoping to use sports betting wagering.

Industry experts say the sector generates about $1 billion a year and is most likely to grow faster than in South Africa and Kenya where the service is more developed.

Russia's 1XBet and Slovakia's DOXXbet have actually both set up in Nigeria in the last 2 years while Italy's Goldbet led the trend, taking a half stake in market leader Bet9ja when the Nigerian firm launched in 2015.

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

But despite advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was crucial to have a shop network, not least because lots of customers still remain reluctant to invest online.

He said the company, with about 60 percent of Nigeria's sports betting wagering market, had an extensive network. Nigerian sports betting shops frequently act as social hubs where consumers can watch soccer totally free of charge while putting bets.

At a BetKing hall deep inside the bustling Oshodi market in Lagos, lots of soccer fans gathered to view Nigeria's final heat up game before the World Cup.

Richard Onuka, a factory employee who makes 25,000 naira a month, was focused on a television screen inside. He stated he began sports betting three months ago and bets up to 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)