Much of Chinese society has come to rely on so-called super apps like WeChat to perform various tasks, from making a doctor’s appointment to calling a taxi and getting a loan, all on one platform.
But those one-stop shops did not take off in the United States. Now, the time may finally be ripe – and the best competitors for super apps come from the world of fintechs, especially platforms dedicated to cryptocurrency.
Cryptocurrencies are rapidly growing in popularity amid sky-high stock prices, record low interest rates and fears of inflation on the horizon, and they could perhaps gain more legitimacy if the US government decides to regulate them fully, a topic Congress is currently exploring.
Dedicated cryptographic platforms like Coinbase or even Paypal, Venmo and Stripe, which have recently added abilities to use cryptocurrencies for payments, could evolve into American versions of super apps, assuming that cryptocurrency issuers can work with regulators to find a compromise between protecting the consumer and creating new financial and investment opportunities. If consumers see cryptocurrency as safe and legitimate – and easy to use – it could become the foundation of super apps.
The bottom line is that people are thinking about finances not just when they go to the bank – if they have access to a bank at all – but when they shop, take a vacation, or pay for a doctor’s appointment.
Expanding these encryption and payment applications to integrate with other applications and services would make many diverse tasks more convenient. The bottom line is that people are thinking about finance not just when they go to the bank – if they have access to a bank – but when they shop, vacation or pay for a doctor’s appointment, and these apps would help provide financial services. they need a personalized way.
Integrating cryptographic payments into other tasks would also go a long way towards democratizing the world of finance and money, giving poor communities and those with no credit history struggling to open credit cards or borrow more access to financial services.
The Rise of the Super App
WeChat started as a china messaging app in 2011, but in 2013 it also worked as payment platform and soon offered many other services, such as shopping, food delivery, and taxi.
It now offers over a million different services, primarily through applets that companies develop to work within WeChat. AliPay, which also has over a billion users, is similar. These two apps have been credited over the last decade with converting China from a cash-only economy to one heavily reliant on digital payments, skipping the middle stage of debit and credit cards.
The concept was also popularized in Indonesia and elsewhere in the region. The fact that they involve financial services, including payment options, is fundamental and the common thread that runs through many of the super-app services.
But while app usage has exploded in the US and Europe; Big tech players like Apple, Facebook and Google have added payment services; and various payment apps like Venmo and Square have become more popular, super apps haven’t come out yet.
This is due in part to data privacy regulations; privacy laws in the US, and especially in Europe, limit data shared between apps, making it difficult to create an ecosystem where applets can automatically integrate with super apps like Alipay.
It also stems from the fact that the US has a well-developed internet ecosystem, with popular social media sites like Facebook and payment sites like PayPal existing before the advent of smartphones, which resulted in each of these platforms. launching separate apps, rather than an app that offers multiple services. Compare this to China, where most of the internet was mobile-first, emerging only after the advent of smartphones. The US market has long been used to separate platforms for separate tasks.
But many analysts point to apps and tech companies adding more services — like TikTok adding purchases, Snapchat integrating game applets, or Apple entering the payment space — and say they super apps will eventually emerge in the US, or at least bigger apps that can do more things. Adding more services to any app and finding a way to keep users on it is also a way to get around the privacy regulations that prevent an app from knowing what its users are doing in another app.
Apps are clearly on their way to becoming bigger and more comprehensive, although the US is unlikely to end up with just one or two dominants, as seen in Asian markets.
The Rise of DeFi
Meanwhile, cryptocurrency has evolved alongside payment apps and super apps over the past decade. What started as a product, Bitcoin, has become a the entire peer-to-peer financial system, known as DeFi, with multiple currencies, including Ethereum and Dogecoin, allowing users to invest, trade, spend and lend money.
But despite its increase popularity, especially during the economic uncertainty imposed by the COVID pandemic, and more traditional financial institutions starting to offer some services related to cryptocurrencies, remains outside the system and the conventional financial sector, with many experts saying it poses high risks. Cryptocurrency issuers have also long resisted regulation as it would defeat their goal of having a decentralized financial product.
But now things are starting to change, with some cryptocurrency platforms expressing an interest in following the regulations.
For example, Coinbase abandoned a plan to offer an interest-earning product, which would allow users to earn interest on currencies lent to others, after the US Securities and Exchange Commission offered no guidance on this and threatened to sue Coinbase if it disclosed it. In fact, Cryptocurrency issuers are realizing that some regulation would give their products more legitimacy and allow more people to use it for more purposes. This occurs when new encryption products come to market recently, including stable currencies, which track the value of traditional currencies.
Regulation of cryptocurrencies, an idea that SEC President Gary Gensler said supporters, along with some in Congress and some in the cryptocurrency industry, may indeed be on the horizon.
Using cryptocurrency to power the first US super app
If cryptocurrency issuers work with government officials to establish regulations that protect consumers without limiting innovation, cryptocurrency is a good bet for what ultimately spurs American superapps.
Think of what could happen if Coinbase worked with the SEC and aligned itself with smart regulation that would validate Coinbase as a viable and certified financial intermediary that users could trust for cryptocurrencies, embracing its new financial products with potentially attractive yields, beyond of its ability to use for daily expenses. Regulation would likely stabilize currencies, making them practical for shopping, rather than just holding potential value. These regulations would also eliminate some of the steps that add friction to current user experiences when it comes to using cryptocurrencies in everyday life, such as long transaction times, high transaction fees and large swings in its value.
A regulatory framework would unlock massive demand for cryptocurrencies, and suddenly there would be many companies – from restaurants to retail – that would like a way to process cryptocurrency payments, encouraging them to integrate with existing cryptocurrency payment applications and making them for them to evolve into super apps. . More people would also make cryptocurrency deposits in these applications instead of using traditional currencies at their banks. This would disrupt the entire economy and financial ecosystem.
Banks have always produced products that they believe the public would you like while the world of cryptocurrencies and DeFi are clearly providing products and services that people need, and millions are already using them, despite their uncertain regulatory and legal status.
Just as ubiquitous, integrated digital payments quickly emerged in China to meet a need – a cash alternative in an underserved market for credit cards – cryptocurrency-based super apps would meet the needs of consumers and businesses looking for a secure and efficient use of cryptocurrencies. instead of or in addition to traditional payment methods.
If cryptocurrency remains an unregulated gray area and its platforms remain isolated from the rest of economic and everyday life rather than evolve into super-applications, the United States will miss the opportunity to build an innovative new mobile and digital financial ecosystem. .