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Super Apps Are Booming, and Here’s Why It Matters

Women using tablet device

Super apps, which combine payment, social media, merchant, loyalty programs and more under a single umbrella, are booming.

Since 2011, when Tencent in China launched what is today known as WeChat, these integrated mobile apps have attracted billions of monthly users around the world.

Having grown mostly from single-payment platforms, food delivery or social media channels, they have expanded into a one-stop application that seeks to incorporate virtually all aspects of consumers' lives.

By integrating so-called third-party "mini programs" into an expanded ecosystem, these mobile consumer commerce apps now dominate markets in China and Southeast Asia. And with the global COVID-19 pandemic, the consumer preference for everything remote has driven a sudden surge of mobile apps. Grocery delivery apps, for example, more than doubled1 as the virus spread in the U.S., while online shopping in Spain, Italy and France—reluctant markets in the past—suddenly discovered the option of e-commerce.2

Jumping Ahead of the West

With relatively recent access to the internet, much of China and Southeast Asia was able to leapfrog the methods of earlier Western approaches and incorporate increasingly integrated solutions instead of leaving it to users to download dozens of applications. Smartphones, from the start, took the place of personal computers in these markets. In Southeast Asia, for example, where just over a decade ago, 80 percent of the population had no internet access, 90 percent of the 360 million internet users today connect primarily through their mobile phones.3

"In contrast to the highly regulated European approach to open APIs [application programming interfaces], an advanced ecosystem is developing in China," the Emerging Payments Association noted.4 And with that rise, they "have come to dominate the payments market, displacing cards with their mobile offerings."

Using contactless technology, QR codes, and digital wallets, these super apps have built out a virtually seamless customer experience with one-touch payments, food delivery, reservations, ride-hailing options, among other things. In fact, two-thirds of mobile phones in China currently use QR codes, and transactions through mobile wallets are expected to hit $1.9 trillion by 2024.5

The impact of COVID-19 has also led to an unexpected increase. With the average time spent on smartphones surging in places, new app downloads jumped 15 percent to more than 31 billion in the first three months of this year compared with the previous quarter, while consumers spent a record amount—more than $23.4 billion—through app stores alone, a report found.6

A Super-Global Surge

While dominating in markets in China and the region— these platforms haven't stopped there. WeChat, for example, has been increasing its capabilities into the U.S.7 and Europe8, initially to serve Chinese travelers, and is expanding from there. At the same time, both WeChat Pay and Alipay are also supporting foreigners traveling to China.

Latin America, Africa and elsewhere are also witnessing the rise of startups and well-established companies pushing into the space. Some of the top players beyond WeChat, Alipay and Meituan-Dianping in China are: Grab in Singapore; Gojek in Indonesia; Paytm in India; Rappi in Colombia; and, to a lesser extent, Kakao in South Korea, Cellulant Corp.'s Tingg in Nigeria, and LINE in Japan.

Even in the U.S. and Europe, where these integrated apps confront more-traditional business models and some regulatory pushback, giants such as Uber9, Facebook10, Google, PayPal and Amazon11 are taking steps to develop broader ecosystems built from their primary services.

As they expand, these ventures are changing the way consumers shop, chat, eat, travel, entertain and pay worldwide. "In many ways, super apps are shopping malls of the digital age," observed Neil Clasper at Verisk Financial Research. "As more traffic goes through super apps, all but the largest merchants will need to consider that avenue."

Given the global surge of super apps, here are four things that every merchant should keep in mind:

1.  A Growing Social/Commerce Ecosystem

Whereas traditional single-merchant apps are used for ordering, shopping, or paying, the super apps' much larger ecosystems bring together these mini programs and unify the customer experience.

"Super apps that simplify all aspects of transaction, from discovery to purchase to fulfillment without the need to exit the app, minimize friction to a point where shopping becomes virtually effortless," according to a report from Kantar Consulting.12

Social media channels are a central component of most of these ecosystems. By adding payments and e-commerce networks, these platforms can pull in merchants as part of an overall messaging to consumers. This integration allows restaurants, for example, to connect with payment, food delivery and reservation services without consumers needing to bounce among different apps or load them on their phone.

The potential benefit for merchants is not only found in the e-commerce marketplace. Walmart, Carrefour and Auchan are just a few of the retailers blending online and offline shopping through the use of these robust platforms, according to Kantar Consulting's report.

2.  A Marketing Platform

The mobile platforms and these powerful ecosystems can also provide significant marketing leverage, thanks to their use of artificial intelligence to drive such things as purchase orders, location offers, discounts and delivery options.

The use of QR codes also transfers significantly more customer data compared with other payment types, allowing for robust cross-marketing and cross-sell opportunities for merchants.

A further benefit comes through the development of sophisticated and integrated loyalty programs. Moving beyond the traditional points-and-rewards approach, new enhancements are created through additional interactions.

"A key ingredient of mobile loyalty apps is not only the integration of payment, marketing, and personalization, but what I term the gamification features embedded in apps that keep a customer engaged and coming back for more," said Raymond Pucci at Mercator Advisory Group.

3.  The Primacy of Payment

With many super apps growing out of alternative banking and payment platforms, ease of purchase and simplified transacting are among the fundamental conveniences provided by these applications.

As payment efficiency is key to frictionless checkout and higher sales completions, companies such as Alipay in China, Paytm in India and Tingg in Nigeria have been able to expand with more multifunctional consumer options. Built on transaction platforms, these payment methods then integrated their popular platforms into the larger ecosystems of e-commerce and other financial services.

In the U.S., PayPal has used its position as a leading payment processor to integrate with other dominant platforms, with major investments in Uber and Argentina's e-commerce giant MercadoLibre.13 Google Pay, Amazon Pay and Facebook Pay have these platforms moving in the opposite direction.

Although these began as payment platforms, "super apps have a value proposition that is much greater than payments," said Jordan McKee at 451 Research. "This helps to implant them deeply within the lives of users to a much greater extent than a traditional payment-centric app."

4.  But a Caution for Merchants

Despite the convenience and integration offered to consumers by super apps, worries about anticompetitive practices, customer privacy and potential favoritism of one merchant over another suggests taking a cautious approach when considering their use.

These platforms are "specifically designed to deliver the breadth of functionality of the internet in a curated form to a smartphone," said Thad Peterson of Aite Group. But, he warned, they can also run the risk of steering consumers to specific merchants or functions. "The focus on accessibility and convenience can come at the expense of competition."

Others warn about merchants getting too closely tied into a single ecosystem and the impact it could have on the merchant's future strategy.14 Once embedded into a larger ecosystem of payments, bookings, social media and various other offers, individual merchants can discover that parts of their business are beyond their control.

"Merchants are facing something of a dilemma," Verisk Financial's Clasper said. While the capabilities of a super app are attractive, "the preference for merchants is to control their own marketplace and communicate directly with their customers."

New Features and Contactless Help Fuel the Growth

Whether welcome or not, the growth of super apps shows no signs of slowing. The convenience for consumers and the cross-marketing, cross-sell opportunities for merchants can be too attractive to ignore. And with new players in the West moving into the space, more and more ecosystems are sure to develop as payment providers, issuers and global networks work to incorporate these types of integrated merchant offerings.

The trend is likely getting a boost, as well, with a recent push toward mobile, contactless, and alternative payments. And the recent COVID-19 pandemic has furthered the desire of consumers for these alternatives, with the popularity of e-commerce and in-store contactless payments increasing.15 Indeed, 27 percent of small- and medium-size businesses have seen a recent uptick in that payment preference, according to a survey.16

These rising consumer preferences, as well as increasing global competition, mean that the changing shape and growth of super apps are here to stay.

"Even with dominant market positions, super apps like Alipay and WeChat Pay are not ones to rest on their laurels," said Jordan McKee at 451 Research. "Through constant iteration and ongoing development, these apps work to continuously deepen their value propositions and relevance for users through the introduction of new features and partners."

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1 Apptopia, 2020. Instacart and grocery delivery apps set consecutive days of record downloads. Viewed 20th May 2020.
2 Financial Times, 2020. Coronavirus: Southern Europe discovers digital shopping. Viewed 20th May 2020.
3 Google, Temasek, Bain & Company. e-Conomy SEA 2019. Viewed 11th May 2020.
4 Emerging Payments Association, Unleashing the Potential of Open Banking, 2020. Viewed 19th June 2020.
5 Juniper Research, 2019. Mobile & Online Remote Payments for Digital & Physical Goods. Viewed 8th May 2020.
6 App Annie, 2020. Weekly Time Spent in Apps Grows 20% Year Over Year as People Hunker Down at Home. Viewed 20th May 2020.
7 Digiday, 2018. WeChat, with 1 billion users, is now doing payments at 50 U.S. retailers. Viewed 8th May 2020.
8 Company press release, 2019. Europe is the Next Key Market of WeChat Pay Cross-border Business. Viewed 11th May 2020.
9 Financial Times, 2019. Uber's quest to become the west's first super-app. Viewed 8th May 2020.
10 The Wall Street Journal, 2019. Facebook Shift Nods to Example of Chinese Super-App WeChat. Viewed 7th May 2020.
11, 2019. Why Super Apps Could Have Superpowers. Viewed 4th May 2020.
12 Kantar Consulting, 2019. IN SEARCH OF ECOMMERCE GROWTH: THE RISE OF THE SUPER APP. Viewed 11th May 2020.
13, 2019. PayPal's latest mega-investment in Uber signals growing global ambitions. Viewed 12th May 2020.
14 The New York Times, 2019. China's Internet is Flowering. And It Might Be Our Future. Viewed 11th May 2020.
15 Oliver Wyman, 2020. Payments Shifts with COVID-19. Viewed 11th May 2020.
16 Electronic Transactions Association, 2020. TSG-ETA COVID-19 SMB Insights. Viewed 11th May 2020.


The information provided herein is sponsored by Discover® Global Network. It is intended for informational purposes, and is not intended as a substitute for professional advice.