By Alexis Akwagyiram and Didi Akinyelure

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

For years, mobile payments failed to take off 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 scams and sluggish internet speeds have actually held Nigerian online consumers back but wagering companies says the new, fast digital payment systems underpinning their sites are altering attitudes towards online deals.

"We have actually seen substantial development in the number of payment solutions that are offered. All that is certainly altering the gaming space," said Seun Anibaba, CEO of Lagos State Lotteries Board, gaming regulator in Nigeria's business capital.

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

That development has been matched by an increase in web payments, according to data from the Nigeria Inter-Bank Settlement System (NIBSS), which is owned by the central bank and certified 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 almost 190 million, increasing cellphone usage and falling data expenses, Nigeria has actually long been seen as a fantastic chance for online businesses - once customers feel comfortable with electronic payments.

Online gaming firms state that is happening, though reaching the tens of millions of Nigerians without access to banking services stays an obstacle for pure online sellers.

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

"There is a steady shift to online now, that is where the market is going," Betway's Nigeria manager Lere Awokoya said.

"The growth in the number of fintechs, and the federal government as an enabler, has actually assisted the organization to prosper. These technological shifts motivated Betway to begin running in Nigeria," he said.

FINTECH COMPETITION

sports betting companies cashing in on the soccer craze worked up by Nigeria's participation worldwide Cup say they are finding the payment systems produced by local start-ups such as Paystack are showing popular online.

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

"We included Paystack as one of our payment choices with no excitement, without revealing to our clients, and within a month it shot up to the primary most used payment option on the site," said Akin Alabi, creator of NairabBET.

He said NairaBET, the nation's second biggest sports betting firm, now had 2 million regular clients on its website, up from 500,000 in 2013, and Paystack remained the most popular payment choice considering that it was included late 2017.

Paystack was established by two Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who received early stage funding in Silicon Valley's Y-Combinator program.

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

Paystack, based in the mad Ikeja district of Lagos, said the variety of monthly transactions it processed increased from about 8,000 in early 2016 to more than 900,000 as of 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 said a community of developers had emerged around Paystack, developing software application to incorporate the platform into websites. "We have actually seen a growth in that neighborhood and they have brought us along," said Quartey.

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

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is also backed by the Y-Combinator program 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 coincided with the arrival of foreign investors intending to tap into sports betting.

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

Russia's 1XBet and Slovakia's DOXXbet have both established in Nigeria in the last two years while Italy's Goldbet led the pattern, taking a 50 percent stake in market leader Bet9ja when the Nigerian company launched in 2015.

NairaBET's Alabi said its sales were split in between stores and online but the ease of electronic payments, expense of running shops and capability for clients to avoid the stigma of gambling in public meant online deals would grow.

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

He said the business, with about 60 percent of Nigeria's sports betting market, had an extensive network. Nigerian sports betting stores frequently act as social centers where clients can enjoy soccer complimentary of charge while positioning bets.

At a BetKing hall deep inside the busy Oshodi market in Lagos, lots of soccer fans gathered to see 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 inside. He stated he started gambling 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," said Onuka. ($1 = 314.5000 naira) (Reporting by Alexis Akwagyiram and Didi Akinyelure in Lagos; editing by David Clarke)