July 2023

Super App – There is a Super App for Everything

“There’s A Super App for Everything”

“There’s an app for that. (There’s an app for that). In 2009, a year after the launch of the Apple Store, Steve Jobs launched this sentence, which later became an advertising slogan to praise the diversity of the Apple brand’s application store. Almost fifteen years later, when the Apple Store now has 1.8 million apps, and Google Play doubles that, the slogan could be updated in this other form:

“There’s A Super App for Everything”

A super app is a “do everything” application for smartphones, chatting with friends, ordering a taxi, taking out a loan, buying a plane ticket, paying for a loaf of bread, booking a restaurant, listening to music, etc.

The phenomenon of super apps was born in China before taking off in Southeast Asia, India, and Latin America, particularly WeChat and Alipay in China, Paytm in India, Grab in Singapore, GoTo in Indonesia, Zalo in Vietnam or Kakao in South Korea and Rappi in Colombia.

These super apps that have slipped into the daily lives of hundreds of millions of people are the stuff of dreams for the American tech giants, which multiply the announcement effects touting their own super app, none of which, however, really exists yet. The same thing happened in Europe, especially in the United Kingdom and France. Start-ups or web companies present themselves on this model while their positioning relates to a single field of activity.

Great Super Apps in China, Southeast Asia, India, Latin America and Africa

WeChat and Alipay are the most used super apps in the world. Created in January 2011 by the Tencent group, WeChat (or Weixin, “micro message” in Chinese) was first a mobile messaging application, similar at first glance to WhatsApp or Facebook Messenger, but “the application has actually built its own model, complex, dense and localized, which turns out to be very different from its so-called Western counterparts”, explains Yuwen Zhang, doctor of information and communication sciences. The gradual integration of other features began in 2013, when Tencent rolled out a video game platform and primarily the WeChat Pay payment tool, in June of the same year, a service now essential in China.

On the occasion of the Chinese New Year of 2014, Tencent launched a feature called hóng bāo in Chinese, “red envelope,” which is the dematerialization of the ancestral ritual of Christmas gifts, which appeared as early as the Tang dynasty, between 618 and 907 according to our Gregorian calendar. Instead of passing red envelopes between members of the same family, friends, or colleagues, WeChat Pay has dematerialized this manual gift.

This practice is still perpetuated on the occasion of many traditional festivals. The WeChat Pay, red envelope service offers two possibilities: the envelope exchanged between two people in a private chat or the “grouped” envelope posted in a common chat where each recipient is assigned a random amount. Six years later, 823 million Chinese sent each other hóng bāo on the first six days of the Lunar New Year.

Since 2017, third parties have been developing many mini-applications inspired by the Apple and Google store model, but these are directly accessible within the super app without requiring any download. This system has paved the way for countless services, including e-commerce, food delivery, travel, games, videos, finance, and more. Three years after the launch of the first mini-programs, WeChat had 3.2 million, so much so that, from now on, “Chinese people’s lives depend on this application,” observes Yuwen Zhang.

Combining both a messaging service called Moments, a microblogging service comparable to the American Instagram, a news service, as well as a payment service with the telephone – in a country where it has sometimes become impossible to pay in cash – the social utility of the super app is undeniable.

In 2021, WeChat was used monthly by 1.2 billion Chinese every month; more than 120 million of them post on Moments daily; 360 million follow official account information, and 400 million use mini apps. WeChat had enabled 1.6 trillion yuan in transactions in 2020, or nearly $250 billion, through its mini-programs, doubling the value of recorded transactions in 2019. In 2021, 900 million Chinese people traded with more than 10 million merchants accepting WeChat Pay, linked to 1,800 banks and payment institutions.

The 1st Competitor of WeChat | Super App

The first competitor of WeChat Pay from the Tencent group is none other than Alipay, launched in 2004 by Ant Group, a subsidiary of the payment service of Alibaba Group, another Chinese internet giant specializing in e-commerce. Used by 1.3 billion buyers in the third quarter of 2021 and 80 million merchants, Alipay also relies on mini-programs, 1 million in number, offering cross-functional services within the super app. With Alipay, Ant Group collects data from more than 1 billion Chinese, “including a large number of young Internet users without credit cards or solid banking records, as well as data from 80 million merchants”, explains Reuters.

Ant Group was reluctant to share this data with credit reporting companies controlled by Chinese regulators for a long time. In November 2020, two days before what was to be the largest IPO in history, the simultaneous entry of Ant Group on the Shanghai and Hong Kong stock markets, the Chinese authorities decided to “postpone” the event (see La rem n°57-58, p.96 and n°59, p.95).

In April 2021, following an investigation into possible monopolistic practices, Beijing finally fined Alibaba 18.23 billion yuan (equivalent to $2.8 billion) for abuse of a dominant position. The Chinese Communist Party has also legislated on the collection and use of personal data in the context of financial services, worrying in particular about the systemic risk that these services represent, undoubtedly a consequence of the bankruptcy of Evergrande, former number 1 Chinese real estate company whose cumulative debt amounts to 300 billion dollars at the beginning of 2022.

Among the services offered, Alipay allows its users to easily subscribe to a bank loan, which is not appreciated by many. According to the Financial Times, the Chinese authorities have decided to require the group to split its payment and loan activities so that the subsidiary in charge of the latter can provide all the data of its borrowing customers to a national rating agency, partly controlled by Beijing.

The blows dealt by the Chinese authorities to its national giants benefit other super apps in Southeast Asia, Latin America, and Africa. Grab, based in Singapore, where it was founded in 2012, sees its listing on the NASDAQ in November 2021, valuing the company at some 40 billion dollars; today, it is also active in Malaysia, Indonesia, Vietnam, Thailand, the Philippines, Cambodia, and Burma.

PayTM Creation | Super App

PayTM was created in 2010 and owned by the Indian company One97 Communications (which counts among its shareholders the Chinese Ant Group, Alibaba Group and SAIF Partners, the Japanese SoftBank Vision Fund, and Berkshire Hathaway, an American investment company headed by Warren Buffett), is used by 350 million Indians and valued at more than 16 billion euros.

The super app Rappi, created in 2015 in Bogotá, Colombia, is now present in 200 cities across Mexico, Costa Rica, Peru, Ecuador, Chile, Argentina, Uruguay and Brazil. SoftBank also invested $1 billion in it in 2019. In six years, the super app, with RappiPay and Rappi Travel, is valued at $5.25 billion and has been downloaded nearly 70 million times in Latin America, giving work to 85,000 delivery people, including 40,000 in Colombia.

MNT-Halan

In Egypt, MNT-Halan started as a ridesharing and delivery app in 2017 before integrating payment services and obtaining a license from the Central Bank of Egypt. In September 2021, MNT-Halan raised $120 million and claimed 4 million users in January 2022.

All of these super apps started as simple meal delivery, taxi, or even credit recharge service applications for prepaid mobile phones before raising significant capital and quickly integrating many other features, first and foremost, a payment service. Super apps are thus developing all over the world, except in Europe and the United States.

In Europe and the United States | Super App

Several reasons, all at the same time cultural, economic, or even legal, could explain the success of super apps outside the United States and Europe. They would similarly underline the difficulties that a great app like WeChat would undoubtedly encounter in expanding outside China.

The first peculiarity, of a cultural nature, stems from the fact that many users in emerging countries discover the Internet through their smartphones and, therefore, precisely with these super apps, which also benefit from a network effect with the exponential increase in their use. Another determining factor in the emergence of these super apps in China is the technical and arbitrary blocking by Beijing of access to WhatsApp, Signal, Twitter, Facebook, or even Google, which has given free rein to national companies without foreign competition.

In addition, the Chinese, Indian or Colombian super apps were built from a messaging software or a delivery service, on which were then grafted a payment service and other financial services. However, in a very different way, the smartphone market developed first in the United States and Europe, bringing the application market with it. While today’s value tends to migrate from smartphones to services, from hardware to software, the United States has remained the land of the superphone and applications by the millions, not super apps.

The smartphone app ecosystem, invented by Apple, followed by Google, is largely controlled by the two giants through their app stores. This market brings together a community of application publishers, ranging from independent IT developers to multinationals; each focuses on launching a particular service, resulting in the fragmentation of services into separate, single-use applications.

Thus, among a multitude of American applications, some leaders stand out for each type of service: Facebook, Snapchat, Instagram, and Twitter for social networks; Deezer or Spotify for music; WhatsApp, Facebook Messenger, and Telegram for messaging; Amazon for delivery; Tinder, Bumble or Badoo for dating apps. In each specific mature market, it will be more difficult for an app to attempt to tie together other services within a single super app.

In Asia, and even though all smartphones are built in China, the ecosystem has developed very differently, not from the phone, but by offering services through apps and mini-programs, as in China. Moreover, the generalization of QR codes, sesame to move from the physical world to the digital world, has yet to occur in the United States or Europe. This practice is explained in particular by limited access to banks for users of super apps in Eastern countries, where scanning a QR code to pay for a purchase is the equivalent of contactless payment with a credit card in the West.

Finally, the competitive authorities, who are currently more European, tend to fight against the emergence of monopolies or duopolies, of which super apps are a driving force. Sharing users’ personal data is fine in some countries. In that case, Europe attaches such importance to it that it is now governed by the General Data Protection Regulations (see La rem n°42-43, p.21).

However, application publishers in Europe, France, or the United States would like to reach the rank of the Western super app. In that case, it is interesting to note that their project is always based on a particular field of activity. PayPal announced to become a super app in the banking and financial field just like Lydia, launched in 2013 in France, and Revolut, born in Great Britain in 2014, which respectively claim 3 million and 16 million customers in Europe.

In the Field of Health:

In the field of health alone, three candidates are in the running on the French market: Alan, a French health insurance and provident company created in October 2016; Doctolib, a service born in 2013, of European size; and Nabla, launched in 2018, which presents itself as “the super health app for women”. Each of these announcements, however promising, does not meet the criteria of an Indian, Chinese, or Brazilian super app.

In Europe, among the first contenders for the title of the super app, the British online bank Revolute has 1.5 million customers in France. It has developed Stays, a service outside of its core business. Stays have been available since July and August 2021 in England and Ireland.

Stays gives Revolute customers to book short-term accommodation via the banking application, thus infringing on the pre-square of Airbnb and Booking.com. The online bank plans to add, among other things, plane ticket purchase and car rental services.

Only a few web giants, such as Facebook, WhatsApp, PayPal, or even Uber, have a sufficiently large user base to attempt to diversify their services. Uber, launched as a passenger transport application, has expanded its services to food delivery, with Uber Eats launched in 2014 in the United States and 2016 in France, then to the rental of scooters and electric bicycles with Jump, sold to Lime, financed by Google, in which Uber reinjected $ 170 million in 2020.

This is also the case for WhatsApp, owned by Facebook, which completed its messaging function in South America with a directory to allow users to find local businesses and which, moreover, is testing the provision of banking products in India. Payment applications are the springboard toward the transformation into a super app. Still, the European competition authority will scrutinize the inclinations of these already dominant players to offer other services, “Which says it is very vigilant against the incursions of tech giants in the financial sector, according to media reports.

PayPal Announced the Evolution of its App into a Super App.

In September 2021, PayPal announced the evolution of its app into a super app. “There are too many apps on all our phones – I can’t have apps for my pharmacy, my grocery store, for all the different e-merchants I have,” explained February 2021 Dan Schulman, president of PayPal. With a new interface, the application invites, through a “Finance” tab, to follow, consult and pay supplier invoices, manage savings, and have a cryptocurrency portfolio. The “Payment” tab with messaging functionality is applicable for donations and national and international transfers. Finally, a “Shopping” tab will soon offer discount coupons valid within a network of partners.

In the meantime, paying for your classical baguettes with Instagram, publishing family videos in a private group on PayPal, or taking out a micro-loan with Uber is not arriving in Europe anytime soon.

China’s Dream of Replacing its Currency with a Digital Yuan | Super App

In contrast, China’s dream of replacing its currency with a digital yuan issued by the central bank of the People’s Republic is on the way to reality. In the year 2022, the digital yuan e-CNY wallet, launched on the occasion of the Lunar New Year in a few cities, including Shenzhen, Shanghai, and the Winter Olympics area, was the most downloaded application in China, ahead of Alipay and WeChat Pay on Xiaomi’s application store (the equivalent of Google Play in China) and the Apple Store.

Unexpectedly, wherever the Winter Olympics are taking place, it is possible to pay with cash, Visa card, or e-yuan, but never with Alipay or WeChat Pay. However, as a “central bank digital currency or MNBC,” the e-yuan is already in use by both applications. Ultimately, the digital yuan will allow the Chinese Communist Party to more closely monitor the financial activity of citizens and businesses everywhere in the world.

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Tags: Alipay, Apple, Application mobile, Grab, GoTo, Kakao, Paytm, Rappi, WeChat, Super App, Weixin, Zalo

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