Fintech majors Paytm and PhonePe are joining a list of top conglomerates like Tata, Reliance and Adani to launch their respective super apps.

A super-app is one that offers a slew of servicessuch as payments, messaging, online shopping, grocery delivery etc on one platform and at least two of these services are used frequently by the app users. Paytm plans to launch its super app by the end of this year and is expected to add 2,000-3,000 app developers to its mini-app store by then. Flipkart-backed PhonePe too is gearing up to acquire Indus OS, which has built Indus App Bazaar.

PhonePe plans to integrate 4 lakh localised Indian apps from Indus App Bazaar to its PhonePe Switch, which is similar to Paytm’s mini-app store. Sources told BusinessLine PhonePe will be using a part of its $700-million fundraise to support overseas acquisitions like Indus OS.

PhonePe Vs Paytm

PhonePe has expanded into a majority of verticals encompassing all things money. PhonePe users can today send and receive money, recharge mobile, DTH, data cards, pay at stores, make utility payments, buy gold, insurance and make investments. PhonePe also launched its Switch platform in 2018, enabling users to place orders on 600 apps directly from within the PhonePe mobile app. PhonePe claims to be accessible at 20 million merchant outlets across 12,000 towns and 4,000 taluks nationally.

On the other hand, Paytm claims to have over 333 million consumers and 21 million merchants.

Broadly, Paytm offers products and services across payment services, commerce and cloud services and financial services. Paytm customers can use the app for utility bill payments, mobile top-ups, money transfer, online and in-store payments, buy entertainment and travel tickets, play online games, access mini-apps across content, food delivery, e-commerce and ride-hailing, among other things.

Other than UPI, there are a host of Paytm Payment Instruments available to the customers such as Paytm Wallet, Paytm Postpaid, Paytm Debit Card, and Paytm Credit Card, among others. According to Paytm’s DRHP, among consumers who joined Paytm app in FY17, the GMV by consumers transacting for three or more use cases in any year increased by 6.8x by FY20, even though FY21 was impacted by the Covid-19 pandemic.

Both the fintech start-ups are trying to replicate the super-app model followed by Chinese payment apps like Alipay and WeChat. These Chinese apps have been successful in building a super-app model because of the number of use cases that they offer. This is what Paytm and PhonePe are trying to do with the mini-app store and Switch respectively.

Market challenges

However, unlike China, it is difficult for Paytm and PhonePe to monetise their core payments offerings because of the zero MDR on UPI mandated by the country. Further, all UPI apps have interoperability amongst themselves (users can choose to pay for a service through any UPI payments app) stopping Indian companies from building a closed-loop ecosystem like their China counterparts.

That’s why, Indian fintech apps start from payment services to acquire customers and add other financial services like lending, insurance and wealth management services to enable monetisation. ”We find none of the Indian tech companies currently at the point where China and ASEAN apps are in the super-app journey and believe Indian companies are still some time away — both from customer value proposition as well as the MOAT in the fiercely competitive Indian market,” said analysts at BofA Global Research.

With domestic companies like Reliance and Tata aiming to become large tech-focused ecosystems, India has become an ultra-competitive market in the super-app space. Also, India is a low-trust market, which makes it easier for better-known brands to do well, the analysts added.