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 established by homegrown innovation firms that are starting to make online organizations more viable.

For many years, mobile payments stopped working to take off in Nigeria as they have in nations such as Kenya, where Safaricom's M-Pesa money transfers have promoted a culture of cashless payments.

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

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

"The operators will choose whoever is quicker, whoever can connect to their platform with less concerns and glitches," he stated, adding that taxes from sports betting in Lagos State rose 30 percent to 40 percent in 2017 from 2016.

That growth 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 reserve bank and certified banks.

In 2016, there were 14 million web payments worth an overall 132 billion naira ($420 million). Transactions jumped 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 almost 190 million, increasing smart phone usage and falling information expenses, Nigeria has actually long been seen as a terrific opportunity for online companies - once customers feel comfortable with electronic payments.

Online gambling firms state that is occurring, though reaching the tens of millions of Nigerians without access to banking services stays a challenge for pure online retailers.

British online wagering company Betway opened its very first African service 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 manager Lere Awokoya said.

"The development in the variety of fintechs, and the federal government as an enabler, has assisted business to flourish. These technological shifts motivated Betway to start operating in Nigeria," he said.

FINTECH COMPETITION

sports betting companies cashing in on the soccer frenzy whipped up by Nigeria's involvement in the World Cup state they are discovering the payment systems developed by local startups such as Paystack are proving 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 companies running in Nigeria.

"We included Paystack as one of our payment choices without any excitement, without revealing to our consumers, and within a month it shot up to the top most pre-owned payment option on the website," stated Akin Alabi, founder of NairabBET.

He said NairaBET, the country's second greatest sports betting company, now had 2 million regular clients on its website, up from 500,000 in 2013, and Paystack stayed the most popular payment alternative because 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 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, said the number of month-to-month 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 single month," said Emmanuel Quartey, Paystack's head of growth.

He said a community of developers had actually emerged around Paystack, developing software to incorporate the platform into sites. "We have actually seen a growth because community and they have brought us along," said Quartey.

Paystack stated it allows payments for a variety of sports betting companies but also a large range of services, from energy services to transport business to insurance company Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur 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 in 2015.

FOREIGN INVESTMENT

Shifts in Nigeria's payment culture have actually accompanied the arrival of foreign financiers hoping to take advantage of sports betting wagering.

Industry specialists state the sector generates about $1 billion a year and is likely to grow faster than in South Africa and Kenya where the company is more developed.

Russia's 1XBet and Slovakia's DOXXbet have actually both established 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 said its sales were divided between stores and online however the ease of electronic payments, cost of running shops and capability for clients to avoid the preconception of gambling in public meant online transactions would grow.

But in spite of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was very important to have a shop network, not least because many customers still stay unwilling to invest online.

He said the company, with about 60 percent of Nigeria's sports betting wagering market, had a substantial network. Nigerian sports betting shops often act as social hubs where clients can watch soccer complimentary of charge while positioning bets.

At a BetKing hall deep inside the bustling Oshodi market in Lagos, lots of soccer fans collected to watch 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 TV screen inside. He said he started sports betting three months earlier and bets up to 1,000 naira a day.

"Since I have actually been playing I have actually not won anything but I think that one day I will win," stated Onuka. ($1 = 314.5000 naira) (Reporting by Alexis Akwagyiram and Didi Akinyelure in Lagos; editing by David Clarke)