New Twitter owner Elon Musk hopes to turn the platform into a super app similar to WeChat. Yet Asia is far ahead of the West in terms of super-app adoption, with significant challenges to overcome for this strategy to be successful.
Twitter recently filed with the US Treasury Department’s Financial Crimes Enforcement Network as the first step towards launching a payments operation. Prior to Musk’s acquisition of the platform, Twitter was already exploring various approaches to embed payment options to monetise the platform and allow content creators to generate revenue. While Musk’s approach deviates from these efforts, it will start Twitter on the path to becoming a super app similar to WeChat in terms of functionality.
Payments can help Twitter diversify source of revenue
Integrating payment solutions within Twitter will help diversify the platform’s revenue sources and reduce its dependency on advertisements and data licensing. According to Twitter’s 2021 annual report, advertisements generated $4.5bn in revenue (compared to $572m for data licensing).
However, a super app is more than just a social media platform with embedded payment solutions. It is an ecosystem that provides various services beyond payments and social media, such as food delivery, ride-hailing services, utility bill payments, and fund transfers.
In addition, part of the success of super apps in Asia is due to the less developed banking and payments infrastructures of many nations in the region, coupled with large unbanked populations compared to Western countries. This gap was readily filled by the emergence of mobile wallets in China, which were able to provide access to online payments to the unbanked population – often via integrations with already popular social media platforms.
WeChat Pay and Alipay also allowed merchants to execute cashless payments and access banking services that could not be provided by incumbent banks, especially in rural areas. These issues do not exist in the US, which is Twitter’s largest market with a user base of more than 76 million according to World Population Review.
Another challenge Twitter will have to address is consumer trust. In recent years, there has been much concern and debate around how tech companies are using consumer data. Meta’s reputation is still damaged from the 2018 Cambridge Analytica scandal. And in July 2022, a hacker managed to steal the personal information of 5.4 million Twitter users by exploiting a gap in Twitter’s infrastructure. If users do not trust Twitter and the way it handles their personal data, they are not likely to use it for payment transactions. Cybersecurity and fraud prevention solutions will need to be improved to protect consumers’ bank details and personal information, otherwise Twitter will remain a target for hackers.
Ultimately, replicating WeChat’s s functionality will not guarantee the success of Twitter’s super-app approach in Western countries, as consumer behaviour differs significantly between the two regions. Twitter will need a strategy to address the challenges that make it difficult for super apps to succeed outside of Asian markets – simply adding payment functionality will not be enough.