Fintech majors Paytm and PhonePe are joining the list of top conglomerates like Tata, Reliance and Adani to launch their respective super apps.
A super-app is one that offers services such as payments, messaging, online shopping, grocery delivery, etc. on a single platform and at least two of these services are frequently used by app users. Paytm is planning to launch its super app by the end of this year and expects to add 2,000-3,000 app developers to its mini-app store by then. Flipkart-backed PhonePe is also set to acquire Indus OS, which has created the Indus App market.
PhonePe plans to integrate 4 lakh localized Indian apps from the Indus App Market into its PhonePe Switch, which is similar to Paytm’s mini-app store. sources told business Line PhonePe will use a portion of its $700 million fundraise to support overseas acquisitions such as Indus OS.
phonepe vs paytm
PhonePe has expanded to cover most of the workspaces. PhonePe users today can send and receive money, do mobile recharge, DTH, data card, store payments, utility payments, buy gold, insurance and invest. PhonePe also launched its Switch platform in 2018, allowing users to place orders on 600+ apps directly from within the PhonePe mobile app. PhonePe claims to be available at 20 million merchant outlets across 12,000 towns and 4,000 talukas nationally.
Paytm, on the other hand, claims that it has over 333 million subscribers and 21 million merchants.
Broadly, Paytm offers products and services in payment services, commerce and cloud services and financial services. Paytm customers can use the app for utility bill payments, mobile top-ups, money transfers, online and in-store payments, purchase entertainment and travel tickets, play online games, use mini-apps in content can, food delivery, e-commerce and ride-hailing, among other things.
Apart from UPI, several Paytm payment instruments like Paytm Wallet, Paytm Postpaid, Paytm Debit Card and Paytm Credit Card are available to the customers. According to Paytm’s DRHP, GMV by consumers transacting for three or more use cases in any year grew 6.8 times by FY20, even though FY21 Covid-19, among consumers who joined the Paytm app in FY17 was affected by the -19 pandemic.
Both fintech start-ups are trying to replicate the super-app model, followed by Chinese payment apps such as Alipay and WeChat. These Chinese apps have been successful in building the super-app model because of the enormous number of use cases they offer. Paytm and PhonePe are trying to do the same with the mini-app store and Switch, respectively.
market challenges
However, unlike China, it is difficult for Paytm and PhonePe to monetize their core payment offerings due to the country-mandated zero MDR on UPI. In addition, all UPI apps have interoperability (users can choose to pay for a service through any UPI payment app) preventing Indian companies from creating a closed-loop ecosystem like their China counterparts.
Hence, Indian fintech apps start with payment services to acquire customers and add other financial services like lending, insurance and wealth management services to enable monetization. “We have not found any Indian tech company at present to the point where China and ASEAN apps are in the super-app journey and believe that Indian companies are still some time away – in terms of customer value proposition as well as fiercely competitive Indian MOAT from both markets,” said analysts at BofA Global Research.
With domestic companies like Reliance and Tata aiming to become the larger tech-focused ecosystem, India has become a hyper-competitive market in the super-app space. Moreover, India is a low-trust market, which makes it easy for better-known brands to perform well, analysts said.
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