Interoperability :: One App Does All

Apps in our phones are no more just applications tasked with one objective, they have become more like ecosystems. Interoperability of features, technology is what has made the building of these ecosystems easier. UPI, Unified Payments Interface built by the NPCI, National Payments Corporation of India is the foremost and one of the most successful examples of this tech strategy. This belief can be further strengthened by the fact that UPI has beat American Express by facilitating 18 Billion Transactions annually.

CEO of NITI Aayog, Amitabh Kant is confident that it will repeat the same feat with Visa, Mastercard in just another 3 years.

While you can find more details about UPI in this piece (linked), here we will discuss the broader changes that interoperability is bringing about.

As we talk about ecosystems, more technology platforms are working towards achieving the goal of reducing the number of apps on a user’s phone. If you look at the Amazon Shopping app, integrating Amazon Pay on the same is an example of the same. From making donations, account transfers, utility bill payments to insurance and booking tickets, the app now collectively offers the services of an e-Commerce platform, payments app/wallet, tickets booking platform. As a way to increase usage, Amazon has used its e-Commerce rewards well. Offering cashbacks and discounts on payment through Amazon Pay, collaborating with ICICI to introduce a special high-rewards credit card have helped people on-board the service. Now, the next step is to make them use it regularly.

Talking about this combination, it is hard to miss PayTM in the conversation. Doing practically the same thing, the difference with Amazon is the direction of development. While Amazon has primarily been an e-Commerce player, PayTM has always been a payments wallet and has later built its e-Commerce platform. However, with ~3% market share in the Indian e-Commerce space, PayTM will take time to gain the trust that Amazon at ~30% market share has. Simultaneously, PayTM having integrated itself in each corner of the country with retail stores ranging from the smallest of kirana shops to restaurant chains holds ~50% of digital payments made to merchants.

Interesting to note is that in overall digital payments, PayTM is 1% behind Amazon Pay in its market share with Amazon Pay standing holding 16% of the market.

Market Share as of May 2020

Easy integration with their shopping ecosystem through discounts and full range of services could be the possible reasons for this. Secondly, UPI as an interface can be held highly accountable for breaking the market quite evenly. The integrational technology has made payment app-agnostic, which leaves companies with only options of unique incentivising strategies on-boarding more customers through increased cost of customer acquisition, for example, cashback scratch cards in Google Pay, discounts in Amazon Pay, coupons in PayTM, ‘one QR code for all apps’ for BharatPe. Limitations introduced by merchants might help one app grow more than the other, however they will have to budge when the consumer usage skews towards one player, which was PayTM in the scenario before UPI came forth.

The business of Application Programming Interface (API) is another factor that promotes interoperability. On most platforms that are also competitors of PayTM, for example BookMyShow, have APIs integrated on their payments page involving PayTM in some event-ticket booking happening outside of its own app. Apollo Invest is another example in the space, a FinTech company offering API solutions to companies to integrate and offer digital loans without receiving an NBFC license.

The latest in the interoperability domain is Beckn. An effort started by Nandan Nilekani, Beckn is not a platform, but like UPI, a foundational protocol that can be used to build platforms on top of it. Important to note is that Beckn is not a platform by itself, but a set of specifications to build platforms.

Imagine UPI. It frees the user from deciding which app to use. All and any apps operating are UPI are “interoperable”. Now imagine Beckn for e-Commerce. Instead of a platform that brings products from multiple sellers under one roof, Beckn keeps their identity separate, integrated in one app but under its own roof. A consumer will go to a Beckn based app and will be able to browse through all these stores separately and their products and place orders. Sellers will also be able to engage delivery agents through the Beckn based platform itself. Dunzo with its personal concierge service integrated with logistics works for both integrating sellers, generating online demand for them, being a delivery agent itself and providing consumers a one-stop-solution as a personal concierge like additional services like hyperlocal fast couriers. Dunzo, as clear now, is based on the Beckn protocol of things.

A simpler way to explain would be like a source did for Entrackr, “Simply put, a user would be able to book an Uber or Ola but wouldn’t require the Uber app.”

Imagine an app that would:

1. Let you browse through nearby stores and their product catalogues.

2. Let you order through the platform itself and make a payment.

3. If you don’t want to order online, let you book a cab to visit the store and make a payment.

4. Put through your activity/order to another app for the consumers linked through a unique ID like UPI.

Add all these and you can think of a Beckn platform.

The likes of PayTM, and now gradually Whatsapp and Jio are now becoming Indian counterparts to Super Apps like WeChat and Alipay. Interoperability and Super Apps as concepts might sound similar but while interoperability allows one platform for multiple apps with different functions to combinatorially operate, Super Apps are practically one platform which does everything on its own.

Super? App?

Business Accounts on Whatsapp for example, let the users interact with other apps/businesses like BookMyShow, Yatra, etc. through the only feature it is built on, that is Text Chat. Although, Facebook hasn’t been able to implement Whatsapp Payments in India, with that it could very well become the next WeChat for India. Jio also cannot be ignored in this regard. It has its hands deep in almost every industry, with the latest super expansion being in their retail arm after the purchase of Future Group. Putting everything onto one app, starting from entertainment, virtual meetings/conferencing, online shopping, payments, similar to other apps we discussed, it is one of the closest to establishing itself as the next big Super App.

While a lot of apps are already operating on these principles, you will still not find a highly reduced number of apps on one’s phone. Possibly because in two similar apps, one app’s primary function is secondary of another leading to reduced trust in the secondary feature. One would need Amazon to make online shopping orders, but still wouldn’t want to lose PayTM even though Amazon Pay is present because of the comfortability since a long time and higher merchant acceptance. Vice versa, similar would be true for PayTM Mall, the e-Commerce arm. We are hopeful that the next generation innovation like UPI comes out of India and Beckn seems to be a promising step in that direction.