The Future of Mobile Payments- Wallets and Super-Apps?

We have come a long way from the 6000 BC days of the BARTER system but still cash has stayed with us for over 3000 years (1000 BC).

The Lydia currency/coinage developed in the Mediterranean region could be the first form of currency and it was later evolved. throughout the Western Hemisphere.

Cash or paper money as we now know it was implemented in Europe in the seventeenth century.

Only Central Banks can use the power of God with money

Mobile wallets still have not been successful in eliminating cash why?

  1. It is an age-old habit, and everyone still accepts it (maybe not in China but no merchant in the world ever says no to cash payments)
  2. Cash cannot be tracked, so consumers know for sure they are not being monitored by a big corporation or the government
  3. We are still the first generation of smartphone users (started in 2007). Things will be very different in 2027 and 2037, where the majority of the workforce form the people born after mobile phones became mainstream
  4. The parallel economy in emerging markets (5 billion of the world population in countries like India, Brazil, Russia, Indonesia, Philippines, Vietnam) is still a very strong lobby. Thus cash will still continue to be relevant among business owners, freelancers, and those who do not trust regulations/governments easily.

Cash has lived for long, but now after COVID 2019 pandemic, it has literally become infectious.

We are currently living the age of mobile payments and digital wallets, but will they beat cash ever?

‘COVID-2019 may have halted the consumption and economic engine temporarily but it may act as the steroid shot in the arm for mobile payments adoption among the reluctant middle class, and unbanked cash users.’

There are over 1.7 billion unbanked people in the world, and they like to feel financially included.

Digital wallets have existed for long but the ‘ mass adoption’ moment never came for them, until yet. China is the only clear winner yet, in adoption of digital wallets and reducing cash, other countries are still waiting for the ‘Victory Moment’

  1. Alipay started in 2004 in China).
  2. WeChat Pay, that launched in 2013, is the mobile wallet inside Chinese social messaging app WeChat
  3. Google Pay and Samsung Pay began in 2015.
  4. The Starbucks App — emerged as one of the leaders in mobile payment apps — recorded about 17 million US memberships in 2019. 30% of payments at Starbucks stores occur with the company’s points program.
Imgae DBS, Missing India’s top wallets- PayTm (backed by Ant Financial), Google Pay, Amazon Pay, Phone Pe (Flipkart), MobiKwik

Is Super apps the answer-for Digital Wallets to Win?

If you notice what happened in China, two apps that successfully managed to beat the cash economy- Alipay (Alibaba), Wechat Pay (WeChat Tencent) they did not start as digital wallets.

Similarly, Starbucks that became a successful payments app, did not start as a digital wallet.

Maybe the answer to digital adoption wallet conundrum lies in:

  1. User-stickiness through one-stop solution,
  2. Customer-Centricity
  3. Digital Community (Content, Commerce, Mobility), any other online marketplace

Only a super app can serve customers in such an integrated fashion. Thus the digital wallets that will win in the future have to develop a strong proposition of a super-app. The only other bet would be global and regional platforms with over ~100 million-plus user-base trying to disrupt financial services.

Super app is only a BIG-BOYS/ GIRLS Play. Go big or go home, because eventually it results in a duopoly kind of outcome.

The last couple of players win and they can be both regional, or one regional or one global player,

In SEA the battle is between the two- major super apps but their core mobility business got hit by COVID-2019 pandemic.

They both brand themselves as super app, because of the clear vision.

Grab Universe- Read Making Grab a Super app

GoJek- https://www.gojek.io/superapp/

Currently, we are seeing a mad Gold-rush like- Telco, e-commerce, banks, fintech, mobility, and social platforms trying to woo the customers for digital wallet adoption.

“When there is a Gold Rush, sell Shovels “

This is why I believe that no matter what happens- Visa, Mastercard, Paypal, Adyen, Square, and Stripe will win in the long run. They are selling the shovel and building a payments ecosystem.

A full post coming soon on these players- keep watching…

Image-Visa

What’s next?

Will the Cryptocurrencies and BitCoin become mainstream or will they be killed by regulations?

The most famous cryptocurrency, bitcoin, was created in 2008 by a developer using the pseudonym of Satoshi Nakamoto.

Nobody knows his whereabouts but perhaps he is most anonymous billionaire of today’s world- given the Bitcoin is trading at 11,595.60 United States Dollar as I write this in Aug 2020.

Image-Web, Forbes

Since 2011, cryptocurrencies have gained momentum from investors and captured media attention, particularly after bitcoin prices rose dramatically in 2013. Following bitcoin, many new cryptocurrency companies have been created, including Litecoin (2011), Ripple (2012), Ethereum (2015), and Bitcoin Cash (2017).

I may be totally wrong here, but I still feel that the central bank, regulators, and governments will try to track and control the ‘consumer adoption’. The crypto assets will do away with the needs of central banks and even some mainstream banks in some cases.

It is one of the innovations that can disturb the world power structures, and hence will face a lot of resistance, policy curbs and struggle sessions at Parliaments/Congress. Explore what happened to LIBRA?

Facebook‘s controversial cryptocurrency project has “failed” in its current form, according to the Swiss president. Ueli Maurer, who also serves as Switzerland’s finance minister, said that Facebook’s Libra would not be accepted by central banks and therefore not work as a currency. “I don’t think [Libra will succeed], because central banks will not accept the basket of currencies underpinning it,” Mr Maurer told Swiss broadcaster SRF. “The project, in this form, has thus failed.”

https://www.cnbc.com/2019/12/27/swiss-president-says-facebooks-cryptocurrency-project-libra-failed.html

It is still very difficult to predict the future of bitcoin when it comes to mass adoption, but definitely it can change the world if even 5% of the richest people or businesses decide to do transactions in crypto-assets.

Maybe they already are doing so…and we do not know

Best regards,

Sidhartha Sharma

Digital and Fintech expert, Author

Connect with me on linked in and read more on medium or twitter

~15yrs Consulting- McKinsey & BCG-Digital Strategy, Ecosystems & Ventures | Start-Up Mentor | Platforms | Digital-First | Author & TEDx Speaker. Views Personal