Vodacom and Alipay are joining forces to create what they say is a "super app," beginning in 2021. Vodacom Financial Services will operate the app, while Alipay will provide its technology. However, it appears that their immediate focus will be on payments, money transfer and e-commerce. The press release mentions that the app will allow users to read news and stream music, but it does not give any further details.
Neither Vodacom nor Alipay has a strong foothold in messaging or content. It sounds like they're laying the groundwork for a South African version of the Alibaba ecosystem, in which there is e-commerce and an accompanying digital wallet that has many applications both inside and outside the ecosystem.
The press release highlights Vodacom's financial inclusion focus. South Africa has about 11 million unbanked people. But digital upstarts also want to focus on customers of incumbent banks. South African banks are known for their high fees.
Vodacom increasingly sees fintech as its future. In the fiscal year ended March 2020, its financial services clients grew 12.8% to 53.2 million while group financial services revenue rose by 22% to R18 billion. SME lending and insurance are key growth areas.
If Vodacom and Alipay are successful in South Africa, they could potentially develop a continent-wide presence. Vodacom operates in more than 30 African countries. In April, Vodacom and Kenya’s leading telecom firm Safaricom acquired the mobile money platform M-Pesa from Britain’s Vodafone for an undisclosed sum. M-Pesa is Africa's largest mobile money platform, boasting 40 million users and processing 1 billion transactions per month.
Still, a strong digital banking ecosystem and a super app are not one and the same. Banking isn't "sticky" the way messaging and content are. Compared to Vodafone and Alipay, WhatsApp may be in a better position to create a dominant app for South Africa, if it launches its payment service there. WhatsApp Messenger is South Africa's most popular app, used by 89% of the country's 38 million internet users, according to Hootsuite.
WhatsApp has partnered with South Africa's Absa Bank since 2018 to offer "ChatBanking," which allows customers to check their balance, buy airtime and make payments to an existing beneficiary.