Everyone Wants To Be A Superapp: Selected Lessons From Asia
Superapps are seductive but will only grow with 3rd party access.
From “X” to your bank, everyone wants to be a superapp! And can you blame them?
The desire to own the go-to platform that allows people to run their digital lives is, without question, seductive. That’s why Elon Musk’s “X” is applying for payment transmitter licenses in the US.
The problem is that building a superapp isn’t as easy as it looks, and the best examples in Asia grew organically.
WeChat Pay and Alipay, the original superapps in China, grew from payments but got their biggest boost when they opened their platforms to third parties through “mini-apps.”
Meanwhile, Grab in Indonesia grew from providing ride-sharing and other digital services and added payments later. Grab breaks the common belief that you have to start with payments!
👉TAKEAWAYS
What made Superapps explode in Asia
🔹 Smartphones as the primary device to access the Internet in Asia
A primary factor that has contributed to the emergence and growth of superapps in Asia has been the exponential adoption of smartphones. A mobile or smartphone is the primary device for an Asian to access the internet. Over 90% of the people connected to the Internet access it through their mobile devices daily.
🔹 Integration of payments
Integration of payments with a superapp platform has been the backbone of the emergence of superapps. A payment service is usually at the core of this ecosystem and acts as an adhesive that holds together the other products or services offered on the superapp.
🔹 Embedded credit
Integration of payment services has acted as the gateway for superapp users to access institutional credit. Consequently, as the integration of payment services on superapps became successful, it paved the way for digital lending services to enter into the superapp ecosystem. This was particularly beneficial for new-to-credit (NTC) customers and the underbanked population.
👊STRAIGHT TALK👊
Why doesn’t the West have a superapp?
If Musk gets his way, “X” will be among the first in the West to combine social media with payments, making it super.
What makes X unique among Western digital players is that it would be open to third parties. Compare this with Amazon, which jealously guards its turf and allows only a limited number of third parties who pay generously for the privilege.
This inability to open their platforms to 3rd parties is also why bank apps are unlikely to become superapps. The mentality of locking down bank app services will be hard to break. Who knows if a digital bank like Revolut or BNPL provider Klarna can break the mold?
Two other major factors foil superapps in the West. First, credit cards, which already handle digital payments on the web, and second, regulations that make cash transmission difficult. Witness “X” getting money transmitter licenses in 50 states!
One thing is clear: superapps are profitable, and while the chart above would seem complete, it does not list the earnings from cash management services.
At their peak, WeChat and Alipay were earning the “float” or interest on deposits worth over $US 200 billion! This ended when regulators forced this cash to be returned to the central bank for overnight deposits.
Still, many platforms hold users' money briefly, adding another dimension to how they can be tremendously profitable.
Where’s your superapp?
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