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 technology firms that are starting to make online services more practical.

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

Fear of electronic scams and sluggish internet speeds have held Nigerian online consumers back but wagering firms says the brand-new, quick digital payment systems underpinning their sites are changing mindsets towards online transactions.

"We have actually seen considerable growth in the variety of payment services that are available. All that is definitely altering the video gaming area," said Seun Anibaba, CEO of Lagos State Lotteries Board, gaming regulator in Nigeria's industrial capital.

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

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

With a young population of nearly 190 million, increasing mobile phone usage and falling information expenses, Nigeria has actually long been seen as a great chance 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 remains an obstacle for pure online merchants.

British online sports betting 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 progressive shift to online now, that is where the industry is going," Betway's Nigeria manager Lere Awokoya said.

"The growth in the variety of fintechs, and the government as an enabler, has actually helped business to flourish. These technological shifts motivated Betway to begin running in Nigeria," he said.

FINTECH COMPETITION

sports betting firms capitalizing the soccer craze worked up by Nigeria's involvement in the World Cup say they are discovering the payment systems created by regional start-ups such as Paystack are showing popular online.

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

"We added Paystack as one of our payment choices with no excitement, without announcing to our clients, and within a month it shot up to the number one most used payment choice on the site," said Akin Alabi, founder of NairabBET.

He said NairaBET, the country's 2nd most significant wagering company, now had 2 million routine customers on its site, up from 500,000 in 2013, and Paystack stayed the most popular payment option given that it was included late 2017.

Paystack was established by two Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who got early phase 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 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," said Emmanuel Quartey, Paystack's head of development.

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

Paystack stated it enables payments for a variety of sports betting companies but likewise a vast array of companies, from energy services to transfer companies to insurance provider Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator program 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 accompanied the arrival of foreign financiers wishing to take advantage of sports betting wagering.

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

Russia's 1XBet and Slovakia's DOXXbet have actually both set up in Nigeria in the last 2 years while Italy's Goldbet was ahead of the pattern, taking a half stake in market leader Bet9ja when the Nigerian company released in 2015.

NairaBET's Alabi stated its sales were split in between shops and online but the ease of electronic payments, cost of running stores and ability for clients to avoid the preconception of gambling in public implied online transactions would grow.

But despite advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was necessary to have a shop network, not least because numerous clients still stay hesitant to spend online.

He said the company, with about 60 percent of Nigeria's sports betting wagering market, had a substantial network. Nigerian sports betting stores frequently function as social hubs where clients can see soccer totally free of charge while placing bets.

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

Richard Onuka, a factory employee who makes 25,000 naira a month, was fixated on a television screen inside. He stated he started sports betting 3 months ago and bets up to 1,000 naira a day.

"Since I have 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; modifying by David Clarke)