Podcast August 23, 2023

Can Elon Musk emulate Asia’s super-app success?

What’s next for super-apps?

When Elon Musk bought Twitter (now known as X), in  October 2022, he described the purchase as accelerating the development of a so-called “everything app”, with diverse functionality similar to that of the Chinese super-app WeChat or GoTo in Indonesia: platforms that are not just for communication, but for food deliveries, making payments, and even ordering cabs. 

Super-apps have made a big splash in Asia over the past decade. WeChat, with one billion active monthly users, has a million mini apps that run inside the platform, eliminating the need for separate apps to shop, find restaurants, or check train times. In South Korea, meanwhile, 87% of the population uses Kakao Talk, which offers a gift service alongside chat and games. 

In 2022, the super-apps market was valued at $61 billion, with 38% of market share in the Asia Pacific region. By 2032, the global market is expected to reach $718 billion — a huge growth rate, and one that several tech leaders, including Musk, are aiming to tap into. But how successful are those efforts likely to be? For this episode of Payments Innovation, our host Yi Nah Yeo spoke to Pratyush Prasanna, Senior Vice President of Merchant Payments at GoTo Financial, to find out more. 

Asian heritage

There are many reasons why super-apps took off so quickly in Asia: large populations with no banking access led to the development of the mobile payment systems that drive super-apps. Asian consumers are also more willing to trial new digital technology. In particular, the Asian tech market was not built around standalone, desktop-first businesses, which made multi-use apps an easier sell.

“Most users in Asia, when they started using apps, were people who were using a powerful computing device in their hands for the first time,” said Prasanna. “Most of them had never used computers, and the smartphone was literally a window to a world of possibilities. The markets in which super apps took off, solved not only the problem of service, which, let’s say, is food delivery, taxis or even buying, but also the problem of discovery. Unlike in the US, where users search on Google and discover stuff. Super-apps provide one single place where you can discover everything.”

Payment methods have also played an important role in the growth of super-apps in Asia. “Traditionally, payments in this region have been very cash-heavy,” Prasanna noted. “12 to 15 years ago, you had to pay for cash everywhere, including in China. The super-apps realised that this was a huge issue, so it was a natural progression of events for them to solve it with wallets, like Alipay and GoPay. For the users, this was a world of difference, as they could consummate these transactions immediately, without the hassle of multi-step payments.” 

Global growth

“Super apps must evolve, otherwise they’ll die,” said Prasanna. “If you don’t look at getting to know the best from what is happening elsewhere, either inculcating it internally or going to those areas and starting to adapt, you will be killed by somebody who’s much better than you. The big incumbents in each nation should look at how they can export the services, and be relevant in other markets.  I personally think that we will see commoditized super apps like the way Go Jek or WeChat are going to other geographies, especially geographies where they can make money.”

WeChat is also tapping into the inbound tourist market by partnering with global financial services providers like Visa and Mastercard to allow visitors to China to make payments via WeChat using a credit or debit card from their home country. 

Another trend is around wrapping content and products into one appealing package. 

“One of the points that I think is getting very interesting is that content plus merchandising is selling,” Prasanna added. “There is a new wave of individual sellers or even companies that are doing a good amount of business on Instagram or on TikTok. In the US, TikTok is actually considered an e-commerce site, because they do so many transactions, so maybe that’s a good way to monetize the power of the network, as well as the power of the platform itself.”

The next big bet

So where are we now? The idea that there is a market for the “everything app” does have a basis in fact: in a 2022 survey, 72% of consumers in Australia, Germany, the UK and the US expressed an interest in super-apps, with the greatest level of interest coming from the UK.

Already, Meta is enabling WhatsApp users in Brazil to find, message, and buy something from a business as part of a single conversation. Musk, who was involved in the early days of PayPal, has been laying the groundwork for X to enable payments on the platform. He has also said that he wants X to offer savings and debit cards as part of a range of Fintech services. But X’s evolution into the “everything app” hasn’t happened quite yet.

“It’s always a fool’s errand to bet for or against Elon Musk,” said Prasanna. “But it’s important for us to understand the nuances of the business. X is, at the end of the day, a user-generated content app. Most super-apps are services — physical services that we consume, like food delivery or taxis. Content monetization, especially user-generated content has always been difficult.

“There is no real first mover advantage. User-generated content, especially for snacky content like X, is already there. Multiple platforms exist in multiple languages across geographies, and there is no significant advantage that Twitter or X.com has which is not there for others.”

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Until next time!

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