WhatsApp, Google can thrive as super-apps in India

Mahindra Logistics

23/12/2020 02:31

(The author is a Reuters Breakingviews columnist.  The opinions
expressed are her own.)
    By Una Galani
    MUMBAI, Dec 23 (Reuters Breakingviews) - India is set to be
the first to tear down the walls around global technology
giants. Entrepreneurs that helped build a new standard in
affordable digital payments used locally by Alphabet, Facebook
 FB.O , Walmart  WMT.N  and all the big banks, are now trying to
unbundle the online market for shopping, food delivery and
mobility. The initiative has the backing of IT billionaire and
Infosys  INFY.NS  co-founder-turned-philanthropist Nandan
Nilekani who helped design the nation’s ambitious biometric
identity system, and it heralds the start of a new kind of
e-commerce. 
    Imagine if WhatsApp or Google Maps could facilitate any web
transaction. Think about ordering a taxi on the Uber  UBER.N 
app and having it fulfilled by a driver working on Lyft  LYFT.O 
or another aggregator. What if a restaurant could make itself
simultaneously visible to users of multiple unrelated apps like
Instagram or Amazon  AMZN.O  through a simple single onboarding
process, and then go on to choose which delivery partner it uses
to satisfy orders based on the best price and services
available. And imagine if the eye-watering fees and commissions
collected by technology giants from merchants and service
providers were driven down to the bare minimum too. 
    All of this is theoretically possible with “Beckn”, a new
open-access digital infrastructure that separates the consumer
and provider sides of any online service so that no one platform
controls the pipe between the two ends. It raises the enticing
prospect of a freer, fairer web-economy as regulators around the
world fret about the power amassed by big platforms. But it also
allows for super-apps to thrive. That’s just as well because
western technology companies operating in India certainly have
grand ambitions. Amazon is piloting a food delivery service.
WhatsApp is rolling out payments.
    Pilot programmes focusing on food and mobility, powered by
Beckn, are quietly underway. Some have the backing of city
authorities and powerful industry bodies like the National
Restaurant Association of India, which represents the interests
of over 500,000 food and beverage outlets. Some have also been
supported by established companies like Mahindra Logistics
 MALO.NS , Google-backed Dunzo, and SoftBank Vision Fund-backed
Delhivery. Most of these unpublicised trials started during the
pandemic with the crisis giving stakeholders a sense of urgency:
Beckn may emerge as 2021’s Robin Hood technology superstar. 
    Nilekani and his co-founders, Pramod Varma and Sujith Nair,
are building on the innovation anchoring India’s payments system
that launched in 2016. The so-called “Unified Payments
Interface” (UPI) gave lenders and technology companies the
ability to build apps on top of an open access, interoperable
system, allowing for low-cost real-time money transfers directly
between different accounts at various banks. UPI now handles
over 2 billion transactions, worth as much as $52 billion, a
month. In the same way UPI turned every smartphone into a bank,
enabling Indians to pay for onions at a roadside stall, settle
dues for goods bought online, and send money to friends and
businesses, Beckn has the power to give superpowers to any app. 
    Taking the idea to the next level brings new challenges.
Payments is a regulated industry where there was a natural body
- the National Payments Corporation of India - to act as a
not-for-profit entity which energised the effort to bring both
sides of the market together. In this instance, trade
associations and local governments may have to take the lead.
Meanwhile, if popular applications like Google Maps or WhatsApp
choose to get involved instead of curating third-party services
for their users like Tencent’s  0700.HK  WeChat does in China,
they will have to figure out a way to adapt their interface to
channel a diverse range of merchant catalogues in a
user-friendly way.
    Of course, big companies might choose to hold back. India’s
payments system didn’t initially attract big guns like $33
billion State Bank of India  SBI.NS  or Ant-backed Paytm. They
are now all users, but one of the most popular UPI applications
is Walmart-owned PhonePe which was created specifically to work
on the new infrastructure. PhonePe was acquired as something of
an afterthought in the U.S. retailer’s acquisition of e-commerce
outfit Flipkart at a $21 billion valuation in 2018: now its
mooted standalone valuation is as much as $20 billion. 
    Beckn is in its early days and may require several
iterations and revisions before it takes off. But the
initiative, alongside India’s individual approach to digital
payments, underscores that the country is determined to set its
own path in shaping the web economy rather than following models
established in America or China. 
    A more equitable, socialist approach also makes sense given
most Indians still rely on government food rations and other
subsidies. Reliance Industries  RELI.NS , the company of India’s
richest man, Mukesh Ambani, regularly emphasises its role in
helping small businesses get online through its new grocery
venture JioMart. Ultimately, though, instead of making small
businesses internet friendly, India may make the internet
small-business friendly.  
    On Twitter https://twitter.com/ugalani
    
    CONTEXT NEWS
    - India’s Unified Payments Interface handled over 2 billion
retail transactions worth $52 billion in October, according to
National Payments Corporation of India. 
    - UPI allows real-time interbank money transfers through a
mobile application.   
    - For previous columns by the author, Reuters customers can
click on  GALANI/   
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Payments is wrinkly bow on Walmart’s India deal     urn:newsml:reuters.com:*:nL4N2IK0Z1
India crudely tries to prevent payments dominance   
 urn:newsml:reuters.com:*:nL4N2HX0LU
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 (Editing by Rob Cox and Katrina Hamlin)
 ((una.galani@thomsonreuters.com;  Reuters Messaging:
una.galani.thomsonreuters.com@reuters.net))