The value of onboarding vs developing your own payments super app

In this edition of our Podbyte series we discuss super apps. From their success in the East and whether this can be replicated in the West, Kirsty Berry, Head of Global Marketing, and Bethan Cowper, AVP Market Development and Business Support, also weigh up the benefits of onboarding with a successful payments super app, versus developing your own.


Kirsty Berry (KB) – Head of Global Marketing

Bethan Cowper (BC) – Head of Mobile


KB:      I think we all know that there has been an increasing digitisation of payments, with consumers and businesses around the world actively seeking alternative payment methods to cash – something that has unexpectedly accelerated in 2020. However, alternatives to cash, doesn’t simply mean card payments. The move to mobile is accelerating and it’s pushing many organisations to either take another look at their mobile strategy, or develop one. We are fortunate to have our Head of Mobile, Bethan Cowper, to share her insight on the role that payments super apps are likely to play in the increasingly mobile world we find ourselves in.

So, there’s a lot of discussion about super apps, but what actually is a super app and how would you define it?


BC:      Good question! So, believe it or not, the term super app was actually first coined by Blackberry back in 2010 - to mean a collection of apps in a closed ecosystem. So if you jump forwards to today, super apps are synonymous with the East, particularly WeChat and AliPay – although there are numerous other successes spread across South East Asia. If we look at the super app in the context of WeChat as just one example, I don’t think even Blackberry could have predicted that one super app would host over a million mini-programs just a decade from concept inception. In short, super apps are essentially a marketplace for services and offerings in one umbrella app.


KB:      I didn’t know that it was Blackberry that first defined the term super app, and it seems they’ve come a long way since then. As you’ve mentioned, you know, people automatically do look to the East when we speak about super apps – and specifically at the huge success of the likes of AliPay and WeChat. I think it is clear that these apps have become a part of everyday life for many over in China, you hear about people not having to leave their app to undertake a multitude of tasks, both on the life admin side, for example finding a dog groomer, booking them, paying for the service, but also on the social side, you see people making plans with their friends through the chat aspect of it, booking tables at a restaurant, ordering their food through the apps and paying for their food or splitting the bill through them.

What do you this is the secret to their success and how transferrable and replicable really is the super app model that we see in the East to the West?


BC:      Wow, okay that’s actually a great set of questions and they do feed into each other. So let’s start from the beginning. China has been heralded as THE success story for all of the aspiring tech hubs around the world. However, China has had a number of unique factors that have led to this extremely widespread adoption. First and foremost, they have a mobile internet-first culture – not as heavily defined as the pre-existing internet culture of the West. When the iPhone first came out in in 2007, less than 15% of the Chinese population was online. Dial up internet wasn’t widespread and the PC internet phase was skipped by many. Instead they went straight to mobile internet, and as such they became a very different breed of internet user, with different habits, behaviours and expectations. Smartphone adoption in the region increased by 50% over the next five years making mobile internet the primary internet experience. PCs didn’t even really get a look in. So this is huge, because we all know first-hand how difficult and lengthy it is to change consumer behaviours and habits.

These super apps also have the government backing. I’ve recently heard the relationship between AliPay and the government described as “cosy” and, if you look at WeChatID - it is a government approved form of ID. In fact, WeChat and AliPay today offer more than 200 public services through mini-programs in the super apps.


KB:      So it seems that the government backing has really helped to drive their usage forwards.


BC:      Absolutely.


KB:      But, if this is the case, then we need to talk about the regulation of these beasts.


BC:      Yes, absolutely. The lack of competition law in this region makes it very easy to monopolise the market, and the lack of GDPR makes it very easy to aggregate personal data. And this is not something that we have in the West. The culture from the East also endorses the aggregation of data, there is an overwhelming amount of trust in the government and a general lack of privacy concerns for the everyday consumer.


KB:      Which is obviously something we can’t say about the West.


BC:      Yes, exactly.


KB:      So based on your description of the reasons behind the success of the most famous super apps out there, and the fact that they really are geo-political and cultural, can this model be replicated in the West? Or is it another M-Pesa? You know, a great idea that has roaring success but just in one region.


BC:      I would say based on what we’ve discussed so far – which I have to say is quite high level and hasn’t really touched upon the nitty gritty – this model ISN’T replicable in the West. However, that doesn’t mean to say it isn’t still very relevant, or that super apps don’t have the potential for success further afield. The consolidation of services rather than lifestyles has already begun across the West. Taxi companies offering food delivery services are a good example - using the same app then to order a scooter, things like that. So, whilst the East grew from the social side – messaging platforms and the like – the West is making leeway in the services side, relying on wallet features to seamlessly integrate payments into the process. We would be remiss to say that geographies, governments and cultural habits don’t play a large part in adoption, they really do, but so do demographics and behaviours - and as these newer generations become increasingly mobile internet-first and convenience-oriented, so do their expectations – and, as such, a marketplace-style culture is already on the rise. We might all end up on the same page, we just have very different drivers to how we get there.


KB:      That’s a really, very interesting point – we are starting to see more companies across the West break into other areas – and diversifying their offerings. Like you said, interestingly, a lot of them, like Uber, who obviously has the taxi driver service as well as the food or takeaway delivery service, seem to have separate apps for these but they might be linked in some way. When this is the case, what then is the driver for super apps in the West and is the consumer demand really there?


BC:      I would argue yes, consumers in the West are convenience-driven, they want anything that will make their busy lives easier. We are all busy, we all want things quickly and simply. Super apps that can aggregate products and services to bring lots of elements of daily life together into one place are only going to be advantageous to the end consumer. They can use one app instead of 20, which makes managing day-to-day life events simpler. So the behaviour and appetites for apps is there and mobile is already a key part of our daily lives. To dip into some stats, because we all like stats;

  Consumers accessed finance apps over 1 trillion times in 2019, which was up 100% from 2017.

  Global shopping app downloads grew 20% from 2018 to 2019, which now leads to over 5.4 billion downloads.

In terms of demand, super apps can provide the means to receive a more personalised service and more personalised offers – something which consumers in today’s world aren’t just looking for, they are increasingly expecting.


KB:      So then if we look specifically at payments, what would you say are the fundamental elements that a payments super app needs to have in order to be successful?


BC:      Payments are key, absolutely. As with the case in many of the super apps in the East, such as Gojek, for the first few years of use profitability was the aspiration, and it is the addition of the payments function that actually brings this into play.


KB:      So payments super apps marry the profitability tick box with further consumer convenience, which makes everything a bit more complex.


BC:      Absolutely. To go from a non-payments platform, like a social media platform for example - I mean, we’ve seen Facebook try to make a foray into this area and not having much success. So, to go from that kind of non-payments platform to being able to facilitate payments is clearly no mean feat. Aspiring super-app providers need to have a deep understanding of the evolving world of payments. Everything from changing opportunities, pitfalls, technology, legalities, security, compliance, standards - all of this stuff that lies beneath the payments process. And again, this is very high-level, it goes much deeper than that, so whilst it might sound obvious – a thorough understanding of payments, and how they work, is vital.


KB:      And obviously, as we’re a part of that payments community, we can categorically say that payments isn’t something you should jump into feet first without understanding what you are getting yourselves into. What else would you say is key for these apps to be able to prosper?


BC:      Well, I could talk about this part all day – but what it boils down to is that a successful payments super app needs a strong payments background – as we’ve just discussed. It also needs to add value for everyone in the value chain. It needs to cater to consumer lifestyle requirements – to serve end-to-end journeys around things like holiday arrangements, financial management, hobbies, memberships, subscriptions, education and childcare fees. I could go on and on. It needs to seamlessly bring these together into a broad range of product and service providers’ to improve overall customer experience. And then you’ve got to garner the interest of merchants and FIs – you’ve got to entice them to sign up to this environment, to this payments super app model, and it has to work for them too, it has to bring them value. So that means taking account of their technical requirements, giving them the opportunity to deliver their own brand experience and providing them with broader sales opportunities than they can access through their own channels.

So for example, many smaller merchants and self-employed service providers, for them payments super apps are particularly appealing, because they offer the means to take a piece of the m-commerce action – something they may not otherwise have the resources to do. All of a sudden, with minimum effort, they have an app, they can sell in a mobile marketplace, they can advertise, offer promotions and loyalty programs, all within one space and with a new channel for revenue growth.


KB:      So, are super apps just for consumers and shops?


BC:      Not at all. We have first-hand experience and successes in the area of utilities for example, in countries where there is no direct debit. So paying your bills in-app is hugely convenient and offers value for everyone across the value chain. Another example, is for smaller banks. A payments super app could offer the chance to tackle financial inclusion in Africa for example, without the bank having to take on the momentous task of building their own mobile banking app, they can have a mobile homepage and offer mobile banking capabilities to their customers. Thankfully mobile payment super apps aren’t a solution looking for a problem to solve, they are a convenience platform evolving to suit lifestyles.


KB:      Yes, so, what you’re saying then is that they have benefits for sectors and areas other than those that you typically think about, for example just being for consumers or smaller merchants. So in that case, what advice would you give to a business weighing up whether to develop a payments app, or onboard with a payments super app?


BC:      I think firstly, you need to look at your resources. Can you really resource and fund the development of your own app and can it give you enough opportunity and reward to justify that investment? For most, the answer will be ‘no’.

So then you need to look at the opportunity of onboarding with a payments super app and this becomes a very viable and exciting prospect.

There are some key things you need to have on your checklist when you’re evaluating this opportunity and who to go to:

            1. Does the app span the full chains of customer journeys?

            2. Does it offer you the chance to create your own brand experience?

            3. Will it broaden your sales reach and growth potential?

            4. Is it easy and cost-effective to onboard your business?

            5. Does the app provider have a strong payments background and understand the regulatory and technical requirements you need to tackle?

            6. And last but not least, and most importantly, what value does it bring to you, your business and your customers?


KB:      Yes, that all makes sense, so I guess what it boils down to then is whether you have the time, money, resources or even the inclination to go it alone, or whether you’d like someone else to help take the majority of the burden away from you and become a part of an ecosystem that may well be the ‘go to’ app of choice for customers. I mean, who’s to say, your customers would even download a standalone app, or YOUR standalone app, let alone use it and have it on their home screen. Does that business really NEED a separate app? Onboarding with a payments super app seems to be a much simpler way to have your business, shop, charity, bank, etc., out there in the mobile world.


BC:      Yes, it does. It all boils down to resources, availability and expertise. And really, it’s very hard to bring everything together to meet your purposes. There are people out there, companies out there and payments super apps out there that could help you. So it’s worth taking a look.


KB:      Well, thank you for taking the time to speak with us today  – it’s been really great to get a deeper understanding of payments super apps and their obvious place in today’s global market. If any of our readers want to find out more about payments super apps, what it takes to create a successful one, and the benefits of onboarding with one, then please check out our recent white paper ‘The rise of the payments super app – a fad, or the future?’ on the Compass Plus website.