PayPal is rolling out a super-app, a digital wallet that bundles payments, financial tools, and shopping services into a single interface. Pioneered by Tencent in China, the super-app model is increasingly being copied worldwide, as large tech companies position themselves as gateways through which users can access multiple services.
Social media companies like Facebook are leading the pack, blending social networking, ecommerce, and entertainment.
For example, Facebook has launched Pay, a payment service embedded in its platform, and Shops, a platform that allows users to create an online store on Facebook and Instagram. However, companies in the financial services sector like PayPal are also developing super-apps.
Blending digital payment, messaging and ecommerce
During its recent Q2 earnings call, PayPal CEO Dan Schulman told investors that the initial version of its new consumer digital wallet app is ready to be rolled out. Similar to WeChat or Alipay, which provide several services in addition to mobile payments, the redesigned app will offer a mixture of financial tools, including direct deposit, bill pay, peer-to-peer (P2P) payments, shopping services, and cryptocurrency support.
Schulman also announced that messaging would be added to the super-app, allowing PayPal users to message family, friends, and retailers without leaving the app. While the integration of payments and ecommerce features is becoming standard in social media super-apps, it is less common for digital payment platforms to offer social networking services.
The California-based company also intends to introduce new ecommerce tools around discounting and rewards. PayPal users will see information about deals within the app that they can save for future use. The company is rolling out an in-app browser for shopping. It plans to create a loyalty program so that customers can amass rewards redeemable for cashback and PayPal shopping credit.
Its $4bn acquisition of Honey – a popular discovery tool that helped consumers find savings while shopping online – in 2019 was a critical step towards developing PayPal’s shopping hub. Honey’s product discovery, price tracking, offers, and loyalty functions have been incorporated into the PayPal app.
The super-app is disrupting traditional players
As platforms like PayPal develop their super-app models, the banking sector is ripe for increasing disruption, driven by these companies’ ability to share data across various service areas and lines of business to develop a better view of their customers and better target financial products to customers.
With their siloed data and basic technology infrastructure, traditional banks struggle to get a good view of their customers. They will need to figure out how they can deliver value in a world dominated by super-apps.