By Alexis Akwagyiram and Didi Akinyelure

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

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

Fear of electronic fraud and sluggish web speeds have held Nigerian online customers back but sports betting firms states the brand-new, quick digital payment systems underpinning their websites are changing mindsets towards online deals.

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

"The operators will opt for whoever is quicker, whoever can connect to their platform with less concerns and problems," he stated, including that taxes from sports betting in Lagos State increased 30 percent to 40 percent in 2017 from 2016.

That growth has actually been matched by an increase in web payments, according to data 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 a total 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, rising cellphone use and falling data expenses, Nigeria has actually long been viewed as a great opportunity for online services - once consumers feel comfortable with electronic payments.

Online gaming firms say that is taking place, though reaching the tens of millions of Nigerians without access to banking services stays a difficulty for pure online sellers.

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

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

"The growth in the variety of fintechs, and the federal government as an enabler, has actually assisted business to thrive. These technological shifts encouraged Betway to begin operating in Nigeria," he said.

FINTECH COMPETITION

sports betting companies cashing in on the soccer craze worked up by Nigeria's involvement worldwide Cup say they are finding the payment systems created by local startups such as Paystack are proving popular online.

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

"We added Paystack as one of our payment choices without any fanfare, without announcing to our customers, and within a month it soared to the primary most used payment choice on the website," stated Akin Alabi, creator of NairabBET.

He said NairaBET, the country's 2nd biggest sports betting firm, now had 2 million routine customers on its site, up from 500,000 in 2013, and Paystack stayed the most popular payment alternative because it was included late 2017.

Paystack was established by 2 Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who received early phase financing in Silicon Valley's Y-Combinator programme.

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 variety of regular monthly transactions 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 every single month," stated Emmanuel Quartey, Paystack's head of growth.

He stated an environment of designers had actually emerged around Paystack, creating software to incorporate the platform into sites. "We have actually seen a growth because community and they have actually carried us along," said Quartey.

Paystack said it makes it possible for payments for a variety of wagering companies however likewise a large range of services, from energy services to transfer companies to insurance provider Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator programme as well as venture 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 use sports betting wagering.

Industry specialists state the sector creates about $1 billion a year and is likely to grow faster than in South Africa and Kenya where the company 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 trend, taking a 50 percent stake in market leader Bet9ja when the Nigerian company introduced in 2015.

NairaBET's Alabi said its sales were divided in between stores and online but the ease of electronic payments, expense of running stores and ability for clients to prevent the preconception of gambling in public indicated online deals would grow.

But in spite 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 many consumers still stay hesitant to spend online.

He stated the company, with about 60 percent of Nigeria's sports betting market, had a comprehensive network. Nigerian sports betting stores often function as social centers where clients can watch soccer totally free of charge while positioning bets.

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

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

"Since I have actually been playing I have actually 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; editing by David Clarke)