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 firms that are beginning to make online companies more viable.

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

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

"We have actually seen significant development in the variety of payment options that are offered. All that is absolutely altering the gaming area," said Seun Anibaba, CEO of Lagos State Lotteries Board, gaming regulator in Nigeria's commercial capital.

"The operators will opt for whoever is quicker, whoever can connect to their platform with less concerns and glitches," he said, including that taxes from sports betting 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 reserve bank and licensed 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 nearly 190 million, rising mobile phone usage and falling information expenses, Nigeria has long been seen as a fantastic chance for online companies - once customers feel comfy with electronic payments.

Online sports betting firms state that is occurring, though reaching the 10s of countless Nigerians without access to banking services remains a challenge for pure online merchants.

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

"There is a gradual shift to online now, that is where the market 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 the company to grow. These technological shifts motivated 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 on the planet Cup say they are finding the payment systems created by regional start-ups such as Paystack are proving popular online.

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

"We added Paystack as one of our payment choices with no fanfare, without revealing to our clients, and within a month it soared to the number one most used payment option on the website," said Akin Alabi, founder of NairabBET.

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

Paystack was established by two Nigerian computer system science graduates, Shola Akinlade and Ezra Olubi, who got early phase financing in Silicon Valley's Y-Combinator programme.

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

Paystack, based in the frenetic Ikeja district of Lagos, stated the variety of monthly 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 month," stated Emmanuel Quartey, Paystack's head of growth.

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

Paystack stated it makes it possible for payments for a variety of sports betting firms but likewise a wide variety of services, from energy services to transport companies to insurer Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is also backed by the Y-Combinator programme in addition to 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 wanting to tap into sports betting.

Industry professionals say the sector produces about $1 billion a year and is likely to grow faster than in South Africa and Kenya where the service is more established.

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 company introduced in 2015.

NairaBET's Alabi said its sales were split in between shops and online but the ease of electronic payments, expense of running shops and ability for customers to avoid the stigma of gaming in public indicated online deals would grow.

But despite advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was necessary to have a store network, not least due to the fact that numerous consumers still stay unwilling to invest online.

He said the business, with about 60 percent of Nigeria's sports betting market, had a comprehensive network. Nigerian wagering stores frequently serve as social centers where consumers can watch soccer free of charge while putting bets.

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

Richard Onuka, a factory worker who earns 25,000 naira a month, was fixated on a TV screen inside. He said he began sports betting 3 months earlier and bets up to 1,000 naira a day.

"Since I have been playing I have not won anything however I think that a person day I will win," said Onuka. ($1 = 314.5000 naira) (Reporting by Alexis Akwagyiram and Didi Akinyelure in Lagos; modifying by David Clarke)