PayPal's Super App is Coming

PayPal has grown considerably during the pandemic era, even as Fin-Tech has shown a renaissance of sorts.

Can Super-Apps Come to the West?

It's inexplicable how Facebook or Google never created a super-app like WeChat or Meituan, but PayPal's super-app will essentially be a clone of Paytm. According to PayPal CEO Dan Schulman, speaking to investors during this week’s second-quarter earnings call, the initial version of PayPal’s new consumer digital wallet app is now “code complete” and the company is preparing to slowly ramp up.

PayPal will become a lot more than a checkout button as it turns out. Paytm an Indian app with many features, shows how Indian tech is teaching even the U.S. what works and how to accomplish it. After WeChat and Alibaba, companies in Asia have been better at producing all important super apps.

PayPal is Cloning India's Paytm App

As reported by Sarah Perez (who is the best in app news), over the next several months, PayPal expects to be fully ramped up in the U.S., with new payment services, financial services, commerce and shopping tools arriving every quarter. The new app will integrate more features than just a Fin-Tech app usually would. It could do what Facebook Messenger and WhatsApp never could.

PayPal has matured nicely in the last few years and now brings in about $6 Billion per quarter. PayPal's Venmo really showed new kinds of features for convenience of P2P payments. The Honey acquisition had brought 17 million monthly active users to PayPal and a ton of new potential features.

How PayPal and Venmo has scaled is really important for the future of a potential super-app. Total payment volume grew 40% to $311 billion, while the Venmo app, which began supporting cryptocurrency services in April, saw payment volume grow 58% to $58 billion. PayPal can take the next step in consumer apps in the West with this kind of 2020 and 2021 surge. We can only hope its R&D is as good as its recent performance.

PayPal's Super App will Integrate Messaging

The super-app will reportedly include messaging as well. This could really put pressure on Facebook Messenger and WhatsApp, among others. With Ant Group getting slowed, it's a unique opportunity for PayPal to follow in the footsteps of Paytm. Paytm is backed by Japan’s SoftBank, China’s Ant Group and Berkshire Hathaway, among others and will go IPO soon.

While hardly a household term in the US—yet—the “super app” concept is thriving in China, India and SE Asia. Inexplicably not so much in Europe or America. The first company to create a ubiquitous super-app would have an incredible advantage. We can easily say that Apple's services moat is a kind of super-ecosystem of apps.

But it's all about utility, as Facebook's apps have never even come close to what WeChat or Chinese Super-apps can do with mini-apps among other innovations. To be called a utility app, you really need to have real-world utility to access services easily. PayPal's loyalty commerce options will be borderline useful.

PayPal must include cryptocurrencies in its super-app, to be able to compete with the likes of Coinbase and others. PayPal’s does have plans for cryptocurrencies with aims to support Bitcoin, Ethereum, Bitcoin Cash and Litecoin at first, initially in the U.S.

Customers in the U.S. (except Hawaii) can buy, sell, hold, and pay at checkout with 4 different Cryptocurrencies on PayPal: Bitcoin, Ethereum, Litecoin, and Bitcoin Cash. That's a start. With rumors Amazon may integrate cryptocurrencies, it's really important for PayPal to get the features of its super-app right to attract more consumers. Currently, PayPal is offering U.S. users to join a waitlist for the new crypto features in-app.

PayPal's Super App

  • Messaging (outside of P2P payments)
  • High yield Savings
  • Early access to direct deposit funds
  • Crypto trading: ability to buy, sell and hold cryptocurrencies (first to be rolled out in the U.S.)

Schulman revealed the super app would have a few other features as well, including high-yield savings, early access to direct deposit funds and messaging functionality outside of peer-to-peer payments — meaning you could chat with family and friends directly through the app’s user interface.

We sometimes forget PayPal has tremendous opt-in from global users. PayPal reported that it had more than 400 million active user accounts as of June 30, with $311 billion in total payment volume for the second quarter of 2021. It can mature from a FinTech player to become something better at this point in the 2022-2026 period. It can like Coinbase or Robinhood also gain from the Bitcoin bull market considerably.

No Mini-Apps in the West Stunts In-App Innovation

However realistically without mini-apps and tons of on-demand integrations, PayPal's app won't be a super-app in any real sense. To date, super apps don’t really exist in the US—but they’re dominant in China. Meituan, WeChat and Alibaba are like on-demand utilities essentially, something in the West we really don't have. Even Indonesian Tech has done a better job than the West at creating on-demand super-apps.

For the most part PayPal is just creating a FinTech super-app, that's not a real super-app, but it's still exciting. American innovation tends to stay in its lane of duopoly like services, without being able to integrate a vast amount of different utilities. It's almost as if America's version of free-market capitalism isn't so free after all. Just as America fails consistently in social commerce, China continues to integrate social media and things like live-streaming, better with commerce.

PayPal Is not an Apps Leader but Got Lucky in 2013 Acquisition of Venmo

The app store (with Apple and Google taxing the internet) duopoly in the West really means its outdated in terms of innovation. Super apps rely on mini programs—lightweight apps that run inside another app. They don't need to be downloaded or upgraded through app stores.

They make it possible for one app to perform the service of many apps. It's not as if PayPal has access to its own mini-programs architecture, it's just adding a few new features and deeper crypto options and claiming it's a super-app. It will be interesting to see if PayPal can gain a messaging facility and keep adding new interesting features.

At the end of the day PayPal ain't no Grab or Paytm, and its high fees like Coinbase will put it under pressure but for now its check-in convenience trumps all of those things. Square's Cash app has done a far better job with crypto, even if PayPal has an incredible business partner ecosystem. PayPal's loyalty upgrades will be interesting, but some of the new features sounds a lot like what SoFi is doing already.

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