Technology

Super apps are accelerating the growth of digital money transfers

The transfer of money within the country is the basis of monetary transactions and payments.

Thanks to global financial inclusion and development efforts, as well as COVID-19-related restrictions, cash payments and usage have declined significantly over the past two years, giving way to P2P and social messaging apps, boosting their popularity. in many markets.

The volume of digital money transfers will exceed 300 billion worldwide for the first time in 2026, compared to 207 billion in 2022. This represents an increase of almost 50%. super apps, in which multiple services, including payment processing and financial transactions, are available in a single application, facilitate the digitization of payments that were previously carried out in cash, including messaging and access to other services in addition to payments, allowing direct P2P transactions and reducing the need for central intermediaries. Therefore, despite its instant settlement capabilities, the blockchain is error-free, unlike the irrevocable nature of instant payments.

A major challenge for international cross-border payment systems (SWIFT) is blockchain-based money transfer solutions. The use of digital currencies provides a means by which token-based payments can be transferred instantly, on a P2P basis, regardless of cost and without third-party intermediaries in the settlement process. In fact, the latest March 2022 Cryptocurrency Report from the Bank of England acknowledges the potential benefits of cryptocurrencies in cross-border payments. One of the futures is blockchain-based tokenized stock trading that can complete transactions in seconds and reduce settlement uncertainty with much lower fee structures.

There are many examples, including the Coinbase partnership with Remitly. Coinbase launched a free pilot program to allow Mexican Remitly customers to cash out digital currencies in February 2022. Western Union’s partnership with Philippine blockchain provider Coins.ph will allow users to receive cross-border payments directly to their Coins.ph wallets in April 2019 is another example. The cryptocurrency-based partnership also extends to other fintech companies, DeFi (decentralized finance) aggregators and banks. In November 2020, DeFi aggregator ADD.XYZ announced that it would partner with numerous mobile money providers in Africa, mobile operator MTN Wallet in Nigeria (as a banking partner) and Inter-Bank Settlement Plc in Nigeria to provide direct access to DeFi lending. thus, customers can “send local currency directly to major DeFi protocols… and other non-lending DeFi protocols” such as insurance and NFTs.

Social payments

Juniper Research predicts that the top three countries will account for just under 74% of global domestic digital money transfer transactions in 2026. Three main usage markets have been identified, with China, the US and India accounting for 74% of global transactions. by 2026. The attractiveness of social payments, in which payments are integrated into social platforms, has led to an increase in transactions in all three countries. WeChat Pay in China and Venmo in the US have been cited by research as examples of how social payments are spurring domestic remittances. The report recommends that remittance providers identify the most popular social platforms in each country and strive to build partnerships that enable social media payments.

Money transfer providers need to focus on the fastest growing markets to maximize their return on investment, with Latin America and Western Europe identified as the countries with the highest projected growth rates. Differentiation will be a major challenge for money transfer applications, especially in a highly competitive market environment. The report identified the super-app approach, in which a market for various services is offered within an app, as the key to building money transfer apps that deliver greater value to users. Therefore, he recommends that vendors integrate with other financial service providers and e-commerce merchants to enhance the unique user value that their applications provide.

Payments as a platform

In short, PaaP is a super app-like business model for mobile money providers offering services that make payments the core of their business, from basic day-to-day activities like transportation coverage and food delivery to those more lifestyle-related. life. (i.e. e-commerce and related benefits and rewards). The model allows mobile operators and other providers to diversify their products by adding additional revenue streams and reducing customer service costs. It also helps to capitalize on existing user bases and add new users and fend off market competition. It is based on a relatively simple proposition such as mobile money, which is a secure and convenient P2P payment solution between mobile users.

Outside the immediate context of mobile money, PaaP provides access to cloud services from participants in the payment ecosystem, such as banks, PSPs (payment service providers), acquirers and issuers, as well as fintech companies and other players, and also reduces deployment. Where banking services are becoming more accessible on mobile devices, PaaP offerings for rapidly developing and expanding applications are becoming vital. Thanks to open APIs, these offerings can be easily used by multiple parties, including end users/customers.

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