A prediction for what to expect from 2019 is that in-app wallets will become a more significant part of our mobile-first worlds. In South East Asia, we have seen a number of large ecosystem apps (super apps) who at their core, use their embedded wallets to enable their users to transact with greater ease. In China as an example, with WeChat Pay and AliPay, there is simply no need to carry cash anymore. The focus is clear, find a way to entrench your app deeper into the lives of people. Grab’s introduction of an in-app wallet was a strategic coup in their challenge and ultimate success again the Goliath of ride hailing that is Uber.
Today, super apps are providing users with everything from retail payments, to ride hailing, food delivery, to micro-insurance and micro-loans. These super apps are now scrambling in all directions, nobody really swimming in their own lane, as they recognise the advantage of being in every part of a user’s life. The battle is on.
This is a very different world in contrast to the one that credit cards enabled. It is no longer a one way street or e-commerce centric. We are still accustom to wallets being exclusively for the paying out of funds for goods and services. This is about to change in a very substantial way, as ecosystems that enable users to exchange content (user-generated content) and services between each other, this digital economy is about to blow up. An example of this would be an app that today would enable users to learn a new language from each other, almost like exchange students. With the embedding of a wallet into the heart of the platform, suddenly a high school kid, or even his teacher, can make money by teaching someone in China how to speak English, all interactions and payments done directly through the app. Or even a well known platform like YouTube, which today enables users to monetise to a limited degree only once they have a certain number of views or subscribers, to dramatically change once a solution to a calculus problem can be given while tutoring AP students for a nominal 50 cents.
As multi-function super apps begin to expand their offering to the consumer, this process becomes significantly simpler once there is a common, native payment interface in place, at the heart of the ecosystem. Super apps are already propelling themselves like rockets into the stratosphere, but it is their integrated wallet plays that will get them to the moon. Much like a common language, a common wallet that can be used by global users, regardless of their country or currency, puts all users on a common playing field. This is absolutely critical for apps that want to continue to create sticky features that help keep users on their platform, but also helps to monetise those users effectively. Ad revenue is no longer a good enough, or stable enough source of revenue for large, scaling apps.
Interoperability is a key driver for wallet adoption. So many of these super apps have yet to come to the realisation that if you restrict how and where your users spend their money, then wallet adoption will always remain for the limited purposes that the app can offer. But for the smart ‘worldly’ app developer (pun intended), it is an obvious strategic benefit to ensure their in-app wallet is open loop. Imagine you use an app in Indonesia, and travel to London for the very first time, but now instead of being useless to you on your travels, your Indonesian app connects you to local retailers, public transport, and allows for top ups or withdrawal of funds like a local. This kind of flexibility of new-age apps will ensure their users remain loyal and always look first within their existing apps for solutions before jumping to a country-specific app ecosystem.
South East Asia is already awakened to the value-add that is in-app wallets, but what about Europe, the Middle East and the US? They are still in their infancy when it comes to wallets, and that is a whole new world of opportunity that is just waiting to be engaged. Think of the Overseas Filipino Worker community. Whether they are nurses, ship engineers or nannies, they are a wide-spread community that today is still largely unorganised and unserved when it comes to financial services. What happens when an app comes around and engages these millions of migrant workers socially, while also giving them an in-app solution to transfer money home, or spend across the world? This is one of the many many opportunities that are the low-hanging fruit which can only really be engaged through a mobile-first, in-app wallet solution.