Future of the 'Super App' and the 'Super Wallet' in India :

The country’s biggest conglomerates, e-retailers and aggregators are now capitalising on the growing app fatigue to deliver an all-inclusive digital experience to consumers via super apps.The emergence of Indian super apps can be further attributed to the exponential growth of the consumer internet sector. Using apps has become an established behaviour for many consumers who, especially in the wake of the pandemic, are comfortable doing more and more online and on their smart phones.

This market is estimated to reach $1.6 Tn by 2025 and covers various sectors such as ecommerce, fintech, healthtech, edtech, consumer services, media & entertainment, travel tech and more. With 20,380+ startups in this space, the segment is home to more than 50% of Indian unicorns

India has already seen an impressive list of super app aspirants, including the Adani group, Reliance Industries (RIL), the Tata group, Paytm, Amazon India and Walmart-owned Flipkart. They are building large digital ecosystems with multiple services, but so far, no one has been able to position itself as the go-to platform commanding maximum stickiness.?

Despite the growing number of users, nailing the product-market fit with positive unit economics still remains a challenge for super apps in India

A volatile regulatory scenario can also make things difficult for super-app aspirants. As the government continues to release new guidelines for the digital economy, such measures will affect the sectors and sub-sectors covered by super apps and may pose multiple compliance challenges.?

Take, for instance,?Open Network for Digital Commerce (ONDC), a government-backed initiative to democratise digital commerce so that buyers and sellers can seamlessly connect irrespective of the platforms where they are registered. ONDC will play a major role here and may soon challenge the dominance of ecommerce marketplaces, thus hindering their super-app potential.

Data Privacy is another primary concern that may pose existential challenges. In a digital world plagued by rising levels of cybercrimes and raging debates on ‘who owns customer data’, the need to comply with stringent laws safeguarding consumer interest will make the data flow difficult for super apps as they continue to battle between the mini-apps within the super app and third-party integrations.?

Apart from vertical entities or ecommerce giants like Amazon and Flipkart, homegrown super apps will have to lock horns with Google and Apple, top foreign conglomerates active in the Indian market. While Google is calibrating Google Pay as its super app, Apple does not need to create a separate one as its iOS network?commands a 4.4% app market share in India as of February 2022.?

Essentially, its operating system features all?essential services , from payment to messaging, music, TV and more, which?resembles a super app, where the company’s proprietary and third-party apps exist.

Again, keeping users glued to just one app for all their needs makes it a high-stakes game. With numerous options and choices out there, engaging users for the longer term and preventing them from switching to competitors are often considered a mission impossible. Given this scenario, super apps are still tricky to operate, especially in widely diversified markets like India.

Consider this. Tata Neu had a good start during its launch week, recording more than 2.2 Mn downloads. According to App Annie data cited in their report, the app saw around 11 Mn downloads in April and May across Apple App Store and Google Play Store.?

Artificial Intelligence-powered financial assistants that can offer personalisation and budget automation for consumers will be one of the services available in the future. For the merchant, there will be a greater ability to target consumers through AI-driven data analytics, allowing them to improve conversion rates because products will be pre-matched to consumers that want to buy them.

The super app of the future will combine a wide range of payments, banking, credit, investment, and insurance products in a single platform, allowing users to store important documents and access credit cards, bank details, biometric information, and even medical records on their smartphones – not a super app but a super wallet.

Super apps and super wallets aiming to reduce online payment friction and increase sales by storing and confirming the customer's payment credentials and shipping information will come and go, based on the consumer adoption. A smart wallet is not smart if it is not simple to use.?

The mobile wallet industry has seen significant advances in the last decade, changing the way people manage and spend their money, and the tasks that these wallets can perform have rapidly expanded.

India’s Point-of-Sale (POS) market is projected to increase by 28.8% between 2021 and 2025 when it will surpass US$1.08 trillion. Cash was the leading in-store payment method in 2021 with 37.1% of transaction value, followed by digital wallets (24.8%), and credit/charge cards (18.1%). However, digital wallets are projected to overtake cash as the most popular in-store payment method by 2023 when they are projected to account for 30.8 % of POS transaction value, according to the 2022 Global Payments Report by Worldpay from FIS .

There has been a significant rise in the adoption of cashless payments with advancements in technology and digitalisation in India. Prepaid cards, bank transfers and cash on delivery market shares are in decline and are projected to collectively comprise just 8.8% of e-commerce transaction value by 2025 as per the report.

Digital wallets (45.4%) followed by debit cards (14.6%) and credit/charge cards (13.3%) were the leading e-commerce payment methods in 2021. The report also added that with superior checkout solutions, flexibility in underlying payment methods, anchor role in e-commerce marketplace ecosystems and local wallets consolidating into regional and global super apps, digital wallets are expected to grow globally.

In India, they are projected to extend their lead over other e-commerce payment methods through 2025, when they are projected to account for 52.9% of the transaction value.

The mobile wallet sector has become one of the fastest-growing industries in the world: it’s currently worth around?$1T?and is estimated to grow to over?$7T?by 2027, according to CB Insights Industry Analyst Consensus.?

India’s biggest challenge for super wallets and e-money is the sheer size of the country’s population. While we do have the initiatives in place, when it comes to driving numbers, there is a certain amount of difficulty.

To deal with these challenges digital payment interfaces need to offer incentives to both consumer and merchant to promote adoption. The key question for both parties is why they should pick digital over cash. For the consumer, mobile payments need to be quick and easy to use, while also being secure. For the merchant, on the other hand, it needs to save time and cut costs, have low cost and give them a new stream of revenue.

While recharges, bill payments and taxi bookings remain strong e-payment opportunities, many digital payment services are trying to expand to other sectors as well. For example, Amazon Pay has tried to add their interface to retailers, brands, small retail enterprises, coffee shops, hotels, and much more, even going to the extent of branching into the education sector by allowing people to pay for coaching classes through mobile wallet.

The initiatives of mobile wallet players will need to be backed by the RBI fully, and government initiatives such as infrastructure, data plans, stable networks, better communications and so on will be integral to the continued success of digital payments in India. There is also a tremendous need for awareness about e-payments, which will play a key role in getting more people on the e-payment spectrum.

All in all, if we manage to hit the right track, then super wallets like Amazon Pay , Paytm and PhonePe will soon replace cash.