The Impact of Singles’ Day on Payment Services and Financial Crime Screening


Rivalling the United States’ Black Friday and Cyber Monday as one of the largest shopping events in the world, China’s “Singles’ Day”, also known as “Guanggun Jie”, has once again broken records. With USD38.4 billion in sales, 2019 has lived up to expectations as the largest-ever Singles’ Day to date.

Taking place on 11 November, the holiday is observed by many young Chinese people in celebration of being single. However, the trend has caught on across Asia Pacific, and now, in its 10th year, consumers are embracing the date to take advantage of the shopping bonanza.

The outlook is rosy for retailers in Southeast Asia particularly, where there are approximately 260 million shoppers. Research has shown that countries in this region are expected to have an online purchasing market of more than USD5 billion by 2020.

Imagine then, the strain of this sudden influx of shopping activity on retailers’ systems and operations. Retailers have to optimise their online sites to effectively handle the volume of online traffic.

Meanwhile, the deluge of online transactions sets off a flurry of activity behind the scenes for banks and payment service providers (PSPs), who need to find new ways to cope with the surge in payments, whilst maintaining the service levels customers expect.

What Happens Behind the Scenes?

Customer due diligence typically begins before any payment transactions can be issued or received. As part of their know-your-customer (KYC) processes, banks and PSPs must screen the accounts of both buyers (subscribing to payment instruments or services) and sellers (subscribing to payment acquisition instruments or services).

The scope and depth of initial due diligence will vary based on the customer risk profile but also the nature of the services provided. The ultimate goal is to ensure services are not misused for facilitating the transfer of illegal funds.

On shopping festival days like Singles’ Day, PSPs will face a challenging time for anti-money laundering and counter financing of terrorism (AML-CFT) and sanctions compliance because of the explosion of new customer accounts being created.

If they fail to block any sanctioned entities or detect illicit financial activity, it could result in investigation, enforcement action and reputational damage.

But due diligence continues beyond the onboarding phase and PSPs are also required to monitor their customers’ activities on an ongoing basis, notably through transaction monitoring and screening. Depending on the nature of a transaction (i.e., domestic or cross-border), or on the type of payment transaction (i.e., debit-card payment or electronic wire transfers), the bank or PSP may also have to face the requirement of ensuring, monitoring and sharing complete and accurate information on the sender and the recipient. Both the payer and the beneficiary’s identifying information are critical as they must then be screened against a relevant set of sanctions lists

Should there be a sanctions match, PSPs would need to enforce the sanction measure which may require them to block the payment or freeze the account, reject or suspend payments, and report it to the relevant authority.

Advantages of Instant Screening

Given the huge influx of transactions, and the changing landscape in payment services, banks and PSPs require systems that can flexibly and automatically adjust to the increased and sudden activity, rather than be limited by architectures that have been built according to standard business throughput.

With instant screening capabilities, they can accelerate the throughput of records in real time, maintaining speed whenever customer and transaction volumes surge, without compromising the accuracy of matches. This will facilitate a fast and frictionless experience for their customers.

PSPs can also consider utilising cloud technology and internet scaling techniques to handle varying volumes. This approach could reduce the total cost of ownership of the screening solution and would not require overhauls to legacy infrastructure.

Consumers’ preferences for shopping may evolve as online purchasing continues to be disrupted, but it will neither stop nor slow down those engaged in illicit financial activity.

Banks and PSPs need to scale their compliance operations to meet demand by having the proper payment services and customer screening processes in place, especially amidst the shopping-fever generated by days like Singles’ Day, Black Friday or Cyber Monday.

With Singles’ Day hitting ground-breaking sales figures, and the US market facing fewer shopping days between Cyber Monday and Christmas this year, it remains to be seen who the overall winner will be in the battle of the shopping bags. Regardless, as retailers compete to get share of wallet from shoppers globally, it’s clear that cross-border payments have become mission-critical. The most compelling PSPs are those that comply with ever-changing regulatory mandates across regions and countries.