Solving the Esports Prize Payment Distribution Challenge
The rapid growth of the electronic sports industry is indisputable. According to industry analysts and reports from well-known market research firms, global esports revenues exceeded a billion US dollars in 2019. The industry has intense user engagement and growing viewership worldwide, attracting sponsors from Fortune 500 companies and venture capitalists, to major media networks like ESPN and TBS. Due to its growing popularity, the industry is facing a number of challenges, especially when it comes to the distribution of esports prize payments to participating players and teams.
Fast Payouts for Fast-Paced Games
Since the early days of esports, tournament organizers have collected players’ personal details, including bank information, in order to facilitate the manual distribution of prize winnings. But sending money through wire transfers, ACH transfers, or paper checks is expensive, incredibly slow, and oftentimes riddled with delays.
When hundreds, or thousands of prize payments need to be sent, tournament organizers may struggle with the manual administration required to quickly process and distribute prize winnings to players – many of whom expect to receive their money quickly, if not instantly. In addition, many traditional payment methods may not be viable for unbanked or underbanked participants, which poses another set of challenges for players awaiting their prize payout.
Digital payment platforms, like Hyperwallet, provide fast access to esports prize winnings through 9 different digital payment methods, including: local-currency bank deposits, PayPal, Venmo, branded prepaid or virtual cards, and transfers to an existing debit card.
These types of digital funds transfers are the preferred payment methods among most demographics these days, especially digital natives like Millennials and Generation Z; the primary target player pool for esports tournaments. Moreover, systems like Hyperwallet’s are capable of handling thousands of prize payments simultaneously and enable winners to track and receive their transfers online, or via their mobile devices, with ease.
International Esports Prize Payments Made Easy
Since esport tournaments are a mix of online and live events in different locations around the world, tournament organizers need to consider how players prefer to receive their prize money locally. In most cases, this will mean that the tournament organization will have to provide multi-currency payout optionality in order to support a growing number of countries and use cases. Moreover, the conversion of prize money to local currency can further complicate and increase the cost of the overall payout process, as many organizers often hold tournaments across multiple regions, and players will often complete globally.
As tournament prize pools continue to grow and winners expect to receive their prize winnings almost immediately, organizers can face challenges when disbursing funds across borders in a rapid, convenient, and cost-effective manner. Digital payment platforms, like that of Hyperwallet, remove many of the administrative hassles associated with the distribution of prize money by providing players with a fast, frictionless, and efficient payout experiences.
Tax Reporting Assistance and Payee Verification
Countries may tax income as either local income (earned from inside the country) or worldwide income (earned from both inside and outside the country). Since money earned at tournaments is considered income, players in many countries will have to deal with tax implications at some point in time. Thankfully, Hyperwallet’s digital payment technology can help address tax issues related to prize winnings for US tournament organizers with US and foreign players. For example, Hyperwallet’s payout technology can perform tax form collection and validation, as well as the filing of 1099 forms with the Internal Revenue Service (IRS).
In order to ensure compliance with payment industry regulations, verification of the tournament winners is required prior to payment disbursement. Tournament winners may be required to provide government-issued identification documents, and/or bank or credit card statements to complete the verification of their nationality, date of birth, and home address. The payee verification helps tournament organizers comply with various government anti-money laundering (AML) transaction laws to ensure successful delivery of funds worldwide.
Extend the Players’ Gaming Experience Beyond the Tournament
From the collection of personal information to the fast and easy distribution of prize winnings, digital is the way forward for esports tournament organizers. Hyperwallet’s payout technology gives esports tournament organizers and game publishers peace of mind, knowing that the positive sentiment experienced during the game will seamlessly extend to the prize payout following the tournament’s conclusion. An automated digital and hands-off approach to prize distribution allows organizers to focus and expand on the tournament brand name and viewership, sustain participants trust, and consequently help grow their prize pools and revenues.
Curious to see how your esports event can benefit from a digital payment platform? Download our esports payout guide to learn how Hyperwallet can help improve your prize payout process.