New rivals: after Uber, 99 intensifies dispute with Mercado Pago and PicPay
On the two-year anniversary of the digital wallet, the company announces news with an eye on increasing sales to already registered customers
Gone are the days when 99, the first Brazilian unicorn, was just a transportation app company. The company, which is part of the Chinese group Didi Chuxing – global leader in the segment – now positions itself more as a “technology business that offers convenience and solutions for the needs of Brazilians”. Within this new way of presenting itself to the national market, a vertical is gaining more and more space: the 99 Pay digital wallet. Launched last year, it already has more than seven million users and should gain a more complete portfolio of services, according to the company’s announcement this morning.
The reasons for building 99’s shift in tone toward a financial offering aren’t hard to understand. Based on 99’s main global rival, Uber, it is possible to see that ‘the tide is not for fish’. The loss of the North American company jumped 54 times in the first quarter of 2022, reaching a record $5.93 billion. It is true that the number considers the company’s investments and ‘expenses’ with option plans for executives – and that revenue grew compared to the previous period, the height of the pandemic – but there is still doubt in the minds of investors as to how (and if) the proposed business model can finally become effectively profitable.
On the side of Didi, owner of 99, it is not possible to know how the business is on the inside, as the company did not even publish quarterly reports for 2022 while it was on the New York Stock Exchange. After persisting in the IPO and facing the consequences of the Chinese government – with fines that can reach US$ 1 billion, according to the WSJ – what can be inferred is that creating new lines of revenue in the largest operating country after China may seem like a Good strategy. In the midst of the most difficult times for the sector and for the context of the operation itself, 99 still does not make it clear, however, when as or if the new product will become cash-relevant within the digital ecosystem the company is building.
The possible conclusion from the spokespersons’ speech this morning is that, for now, the focus is on developing financial products and services for those who already know 99 and already use the transport application. “The services offered in the wallet are focused on meeting the needs of users who travel around the city, use the delivery service, payments and financial transactions”, says 99, in a note. It is a speech that is in line with what was presented this morning: by developing financial products that aim to upsell to customers already registered at one of the ends of the platform, 99 Pay managed to ‘distribute’ approximately R$ 58 million to digital wallet customers , considering benefits, discounts, incentives and the portfolio’s income.
The focus on functioning as an additional financial service to the transport app — without the mission of conquering as many customers as possible from scratch, almost as a ‘laboratory’ — may be one of the reasons why the digital wallet is still much more focused in policies to encourage the use of the app than charges for services. Today, 99 Pay offers the possibility of investing with yields of up to 220% of the CDI and, now, starts to offer more cryptocurrency options, gift cards and even a financial education course. On the billing side, the digital wallet charges a fee of 2.8% for payment of slips with a credit card that exceed R$100, excluding consumer bills and taxes with a barcode starting with 8. The fee is lower than the competition, within the same parameters.
The company’s main target audience for this range of services (which is becoming increasingly larger) is the C and D classes, with whom 99 as a transport app approached in the pandemic. When conducting a survey in six capitals of the country, the company found that 95% of respondents from these classes made recurring use of the app and 55% increased the frequency of use during the covid-19 crisis. In times of high inflation and interest rates, which can reduce the purchasing power of this audience, 99 Pay is now trying to reach this audience with a strategy different from the pure and simple car, offering additional financial income. What can, in the limit, feed back the demand for transport.
In this process, the digital wallet is much more about remunerating investments than offering credit to this population. The company’s strategy is to raise awareness of the importance of saving money, which is quite a challenge in Brazil, and to develop the confidence of the unbanked population to store their income within the digital wallet. Getting there takes time, but the company starts taking its first steps in September this year. This is the month in which a financial education course developed in partnership with Barkus, a social financial education startup, will be made available free of charge to 100,000 people in peripheral regions. The main difference is Iara, artificial intelligence from Barkus, which offers, in a simple and dynamic way, the teaching path focused on financial issues related to everyday life, in addition to the fact that the entire course is carried out by WhatsApp, a platform more than popular in the country.
In addition, the financial services vertical will also start offering, starting next month, a wider range of cryptocurrencies in which it will be possible to invest from BRL 1.00, without charging fees. Since September of last year, it has been possible to make investments in bitcoin and, now, Ethereum, USDC, Solana and Mana also join this portfolio. Asked about the possibility of allowing users to pay for rides with bitcoin, César Trevisan, head of crypto assets at 99 Pay, has not yet given details. “We are analyzing different fronts and identifying what consumers want, but for now we have no news on the subject,” he said, to the EXAM IN.
Gift cards are perhaps the point that least touches income itself, but they work as a bridge for the company to be present in the lives of potential users at a time when they don’t have to leave their homes. What the company presents is that gift cards from Xbox Live, PlayStation Store, League of Legends, Google Play, STEAM, Spotify and Claro Fixo were made available on the platform based on the insights of a survey carried out by Consumoteca with 1,200 people. The results showed that the websites and apps most accessed by the C class, 44% are directed to games and 51% to music apps.
The investments and advances in the digital portfolio make clear the potential that the Chinese company sees to advance in Brazil and how willing it is to develop auxiliary areas to the core business to maintain its global leadership position in the sector. Amid questions about the profitability of the transport model by application, what 99 can show is that it is developing its own laboratory to be able to understand, in the long term, how to keep the business standing. What remains, at least for now, is the curiosity to understand what is going on inside the company — and the expectation that the listing in Hong Kong can finally get off the ground.