Much of Chinese society has come to depend on so-called super apps like WeChat to multitask, from making medical appointments to calling a cab to getting a loan. all on one platform.
But such one-stop shops have not taken off in the United States. Now, the time may finally have come – and the best contenders for super apps come from the world of fintech, especially dedicated cryptocurrency platforms.
Cryptocurrencies are rapidly gaining popularity amid very high stock prices, record interest rates, and fears of inflation on the horizon, and they could perhaps gain legitimacy if the U.S. government decided to regulate them fully, a subject currently being addressed by Congress. exploring.
Dedicated crypto platforms like Coinbase or even Paypal, Venmo, and Stripe, which recently added capabilities to use crypto for payments, could evolve into the US versions of the super apps, assuming that crypto issuers can work with them. regulators to find common ground between consumer protection and creating new financial and investment opportunities. If consumers see crypto as safe and legitimate – and easy to use – it could become the basis of great apps.
The bottom line is that people think about finance not only when they go to the bank – if they even have access to a bank – but when they do their shopping, take a vacation, or pay for a doctor’s visit.
Extending these crypto and payment apps to integrate them with other apps and services would make many miscellaneous tasks more convenient. The bottom line is that people think of finance not only when they go to the bank – if they even have access to a bank – but when they shop, take vacations or pay a doctor’s visit, and such applications. would help provide financial services. they need a personalized way.
Integrating crypto payments into other tasks would also go a long way in democratizing the world of finance and money, empowering underserved communities and those without a credit history to struggle. to open credit cards or to obtain loans better access to financial services.
The rise of the super app
WeChat started as a messaging app in China in 2011, but in 2013 it also functioned as a payment platform and quickly offered many other services like shopping, food delivery, and taxi taking. .
Now, it offers over a million different services, mostly through mini-apps that companies develop to work within WeChat. AliPay, which also has over 1 billion users, is similar. Both of these apps have been credited with the past decade of converting China from an exclusively cash economy to one heavily reliant on digital payments, skipping the middle phase of debit and credit cards.
The concept has also become popular in Indonesia and elsewhere in the region. The fact that they involve financial services, including payment options, is essential and the common thread running through most of the super app services.
But while the use of apps has exploded in the United States and Europe; Big tech players like Apple, Facebook and Google have added payment services; and several payment apps like Venmo and Square have become more popular, super apps have not yet emerged.
This is in part due to data privacy regulations; Privacy laws in the United States, and particularly in Europe, limit the data shared between apps, making it more difficult to create an ecosystem where mini-apps can automatically integrate into super-apps. like Alipay.
It is also due to the fact that the United States had a well-developed Internet ecosystem, with popular social media sites, like Facebook, and payment sites, like PayPal, existing before the rise of smartphones, which has leads each of these platforms to launch separate applications, rather than a single application offering multiple services. Compare that with China, where much of the internet was first mobile, only appeared after the advent of smartphones. The US market has long been used to separate platforms for distinct tasks.
But many analysts point out that apps and tech companies are adding more services – like TikTok adding purchases, Snapchat integrating mini-apps for games, or Apple entering the payments space – and saying that the super apps will eventually. emerge in the United States, or at least bigger apps that can do more stuff. Adding more services to any app and finding a way to keep users on them is also a way to bypass privacy regulations that prevent an app from knowing what its users are doing on another app.
The apps are clearly on track to get bigger and more comprehensive, although the US is unlikely to end up with just one or two dominant apps, as seen in Asian markets.
The rise of DeFi
Meanwhile, cryptocurrency has grown alongside payment apps and super apps over the past decade. What started as a single product, Bitcoin, has grown into a comprehensive 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 rise in popularity, especially during the economic uncertainty posed by the COVID pandemic, and more traditional financial institutions starting to offer some crypto-related services, it remains outside the traditional financial system and industry, of many experts claiming that it poses high risks. . Crypto issuers have also long resisted regulation because it would defeat their goal of having a decentralized financial product.
But now things are starting to change, with some crypto platforms expressing interest in following the regulations.
For example, Coinbase scrapped a plan to offer a paid product, which would have allowed users to earn interest on coins loaned to others, after the United States Securities and Exchange Commission failed to give a advice about it and threatened to sue Coinbase if it released it. In fact, crypto issuers are realizing that some regulation would give their product more legitimacy and allow more people to use it for other purposes. This comes as new crypto products have recently entered the market, including stablecoins, which track the value of traditional currencies.
Crypto regulation, an idea that SEC Chairman Gary Gensler has said he supports, as well as some in Congress and others in the crypto industry, may indeed be on the horizon.
Using Cryptocurrency to Power America’s First Super App
If crypto issuers are working with government officials to put in place regulations that protect consumers without limiting innovation, crypto is a good bet for what finally drives America’s super apps.
Think about what could happen if Coinbase worked with the SEC and aligned with smart regulation that would validate Coinbase as a viable and certified financial intermediary that users could rely on for crypto, encompassing both its new financial products. with potentially attractive returns in addition to its ability to use for daily expenses. Regulation would likely stabilize currencies, turning them into something convenient for shopping, rather than just holding them for their potential value. Such regulations would also remove some of the steps that add friction to current user experiences when it comes to using crypto in everyday life, such as long transaction times, high transaction fees, and large swings. of its value.
A regulatory framework would unlock massive demand for crypto, and suddenly there would be plenty of businesses – from restaurants to retail – wanting a way to process crypto payments, prompting them to integrate into existing crypto payment apps and evolving them into super apps. More people would also be making crypto deposits on these apps, rather than using traditional currencies in their banks. This would disrupt the entire economy and the financial ecosystem.
Banks have always produced products that they think the public wants while the world of crypto and DeFi clearly provides products and services that people need, and millions of people already use them, despite their uncertain regulatory and legal status.
Just as ubiquitous and integrated digital payments quickly emerged in China to meet a need – a cash alternative in a market underserved by credit cards – crypto-based super apps would meet the needs of consumers and businesses alike. finding a secure and efficient way to use cryptography. instead of or in addition to traditional payment methods.
If crypto remains an unregulated gray area and its platforms remain isolated from the rest of economic and everyday life, rather than evolving into super apps, the United States will miss the opportunity to create an innovative new financial ecosystem. mobile and digital focused. .