Tim Harned is a Managing Director at Progress Partners. He has a more than 30-year career in M&A and capital advisory, during which he has executed strategic transactions for Fortune 500 and early-stage companies.
Ever since Elon Musk’s “be careful what you wish for” acquisition of Twitter, speculation about America’s first homegrown “super app” has skyrocketed.
In October Musk tweeted According to Cathie Wood, founder of Ark Invest, Musk is “thinking about a super app like WeChat Pay”. Remember Musk founded X.Com and merged it with Confinity to create PayPal.
For context, China’s WeChat launched as a messaging service in 2011 and has since grown into a combination of Meta, Apple Pay, Venmo, Amazon, Uber, Robinhood, Rocket Mortgage, Kayak, and Healthcare.gov — plus more than 3.5 million partners . Mini-Programs” that work within the app. PayPal and Walmart have been teasing their own versions of financial super apps since at least September 2021, but with a lot less fanfare.
Twitter, PayPal and Walmart could compete to monetize the financial lives of millions of people. This raises several questions: Why is now the moment for super apps in the West? How should we evaluate the progress towards a super app? How do Twitter, PayPal and Walmart follow this idea? Which one has the best odds of winning, or is there actually room for multiple leaders?
Although super apps are popular across Asia, Latin America and Africa, they have not caught on in the US and Europe. If Twitter, PayPal, and Walmart want to change that, we have to ask ourselves why.
The benchmark of a fintech super app is how much financial activity it can concentrate in an ecosystem
“Super apps took off in Asia because Asian consumers had underperforming smartphones that weren’t capable of managing 40 to 50 separate apps,” said Ron Shevlin, chief research officer at Cornerstone Advisors. In the US and Europe, smartphones didn’t have the performance or storage issues typical of hardware in less developed regions, so super apps were never a necessity.
Additionally, Axios argues, privacy fears, strict banking regulations, and Apple’s and Alphabet’s control over payments in their mobile operating systems have deterred potential super apps.
A super app doesn’t solve any obvious problem for the western consumer, other than offering convenience and security (both debatable). However, one could argue that such an app could offer financial, banking and credit building opportunities for those who are either unbanked or unbanked, who are either excluded from mainstream financial services or afraid of them.
So why now?
Twitter has lost the field of digital advertising to Alphabet, Meta and Amazon. PayPal is overly dependent on payment processing, which is increasingly a crowded competitive space. Walmart, always a step behind Amazon in digital, is overdue to try something its Seattle-based competitor hasn’t tried.
Super apps are a fresh and new pasture for these behemoths.