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By Alexis Akwagyiram and Didi Akinyelure

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

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

Fear of electronic scams and sluggish web speeds have actually held Nigerian online consumers back but wagering companies states the new, quick digital payment systems underpinning their sites are changing mindsets towards online transactions.

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

"The operators will opt for whoever is faster, whoever can link to their platform with less concerns and problems," he said, adding that taxes from sports betting in Lagos State rose 30 percent to 40 percent in 2017 from 2016.

That development has been matched by a rise in web payments, according to information from the Nigeria Inter-Bank Settlement System (NIBSS), which is owned by the central 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 very first quarter of 2018 there were nearly 10 million worth 61 billion.

With a young population of nearly 190 million, increasing cellphone use and falling information expenses, Nigeria has long been seen as an excellent chance for online organizations - once consumers feel comfy with electronic payments.

Online gaming companies say that is happening, though reaching the tens of millions of Nigerians without access to banking services stays an obstacle for pure online merchants.
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British online sports betting firm Betway opened its very first African service in Kenya in 2015, followed by Uganda, Ghana and South Africa. It launched 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 said.
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"The development in the variety of fintechs, and the federal government as an enabler, has actually helped business to thrive. These technological shifts encouraged Betway to begin running 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 created by regional such as Paystack are proving popular online.

Paystack and another local startup Flutterwave, both founded in 2016, are offering competition for Nigeria's Interswitch which was established in 2002 and was the primary platform used by companies running in Nigeria.

"We included 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 alternative on the site," said Akin Alabi, creator of NairabBET.

He stated NairaBET, the nation's second most significant sports betting firm, now had 2 million regular consumers on its site, up from 500,000 in 2013, and Paystack stayed the most popular payment option given that it was included in late 2017.

Paystack was established by two Nigerian computer system science 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 investors including China's Tencent and Comcast Ventures in the United States.

Paystack, based in the frenetic Ikeja district of Lagos, stated the number of 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 developers had emerged around Paystack, producing software application to incorporate the platform into sites. "We have seen a growth in that community and they have carried us along," stated Quartey.

Paystack said it enables payments for a variety of sports betting companies but likewise a broad variety of organizations, from energy services to carry business to insurance company Axa Mansard.
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Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator programme as well as 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 coincided with the arrival of foreign financiers wishing to use sports betting.

Industry experts state the sector generates about $1 billion a year and is likely to grow faster than in South Africa and Kenya where business is more developed.
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Russia's 1XBet and Slovakia's DOXXbet have both set up in Nigeria in the last two years while Italy's Goldbet led the trend, taking a half stake in market leader Bet9ja when the Nigerian firm released in 2015.

NairaBET's Alabi said its sales were divided between shops and online however the ease of electronic payments, cost of running stores and ability for customers to prevent the preconception of gaming in public implied online deals would grow.
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But regardless of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was essential to have a store network, not least because numerous customers still remain reluctant to invest online.

He stated the business, with about 60 percent of Nigeria's sports betting wagering market, had a comprehensive network. Nigerian wagering shops frequently function as social hubs where consumers can enjoy soccer complimentary of charge while positioning bets.

At a BetKing hall deep inside the dynamic Oshodi market in Lagos, lots of soccer fans collected to see Nigeria's last warm up video game before the World Cup.

Richard Onuka, a factory employee who earns 25,000 naira a month, was focused on a television screen inside. He stated he started gambling 3 months earlier and bets as much as 1,000 naira a day.

"Since I have been playing I have actually not won anything however 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)