How to Build a Peer-to-Peer (P2P) Payment App

Mobile payment apps greatly simplify our life, you can't argue with that. And the more our society evolves and civilizes, the more we need these services, which have become almost indispensable.

Among them, the so-called p2p applications are especially popular today, and rightfully so. People choose them for their ease of use and the opportunity to save time and effort, which is a must-have in our turbulent times.

Perhaps it's the right moment to meet the demand and create a mobile P2P payment app of yours: fast, secure, reliable. But where to start and how to achieve such a high-ground goal? Is it even possible?

Well, you have every chance... just read our article and follow its tips.

Why are P2P money payment apps so popular?

According to a special study made by Bank of America, the young population of the planet can no longer imagine life without P2P payments, which are being actively used by more than 65% of respondents. As to other age groups, more than 45% of all people surveyed say they intend to try out digital financial services in the near future. 

Among those who use any P2P money payment app, at least 70% confess that convenience and time saving prompted them to resort to it, and about 50% of people cite peer influence as the main reason. There are also about 16% of respondents who just don't like using cash.

Any eCommerce project needs a reliable payment gateway. Click here to find out how to choose the perfect solution and integrate it into your platform.

The global P2P payments market size is expected to reach USD 8,078.81 billion by 2030, growing at a CAGR of 17.53% during the forecast period (2022–2030).
That's why, in recent times, the demand for P2P payment app development has increased significantly among financial institutions. In addition, the race targeted at the expansion of geographical coverage has intensified, and attempts to drive competitors out of a market have become rather frequent. Every company wants its service to join the ranks of the most popular payment apps. 

Why is it happening?

The thing is, the economy is gradually undergoing a conversion to digital form, so cash becomes the past. Besides, now people have more opportunities (and more reasons, such as Covid-19) to make remote purchases, which also affects the widespread transition to cashless transfers.

No wonder various companies began to increasingly implement various online payment systems including P2P ones, which are especially pertinent to small businesses. And let’s agree: in the little grocery store (or another place of the same sort), a seller doesn't always have a terminal to accept funds with a bank card. And peer-to-peer payment solutions would help the shopper send money directly to his personal card. 

P2P payments are gathering momentum in other markets too, covering streaming, cleaning services, and property rentals.

Let's talk about digital wallets: their types and market prospects in general. Follow the link to learn each detail.

Now you know more about the trends in the mobile payments industry, and it’d be better to get back to basics. We want to be sure we're on the same page with you and clearly understand each other.

What is a peer-to-peer payment app?

P2P apps are mobile solutions intended to transfer money between cardholders, even if they’re clients of different banks. To be precise, it doesn't matter whether the users (a sender and recipient of funds) belong to the same payment system. 

As you probably know, P2P means ‘person-to-person’ or ‘peer-to-peer’. That is, the essence of these services is clear from their very name: it's about money transfer from person to person without the participation of third parties (intermediaries) - financial organizations.  

By the way, sometimes on the Internet, you can stumble upon the mention of c2c mobile services (c2c means card2card), which, in fact, are peer-to-peer payment apps either.

You can freely take advantage of P2P transactions if you need to pay your rent, send money to your aging parents, or, say, share a restaurant bill with your friends, etc. However, let's outline the target audience more precisely.

The target audience:

• Freelancers and self-employed professionals. We’re talking about photographers, designers, graphics, independent mobile or web developers, and other similar specialists hired to perform a specific amount of work. And these experts often collaborate not with companies, but with individual persons (say, a photographer makes a photo session for newlyweds), and therefore p2p money-transferring mobile apps will be very useful to them.

• Family and friends. Of course, these applications will help out users who want to send funds to their relatives or friends. There're many examples of the sort: the need to transfer money to parents; financial assistance to a child student living in another city; collecting money for a gift to a friend.

• Mobile and web p2p marketplaces. These platforms serve as a kind of intermediary between individuals - buyers and sellers of goods. And p2p mobile apps would become a great payment solution for them too. 

• Service companies (restaurants, beauty salons, barbershops, food delivery services, etc). Thanks to peer-to-peer systems, business owners would kill two birds with one stone, so to say: firstly, they'll attract new customers by offering them an alternative payment method, and secondly, they'll improve staff loyalty by allowing them to increase their income a little bit. The fact is, with the help of P2P apps, waiters, couriers, street musicians, bloggers, etc. can freely accept tips (let's say, if clients don't have enough cash).

• Organizations and people, interested in non-profit fundraising. All sorts of charitable initiatives, crowdfunding, and others of the same kind would certainly find these p2p services extremely helpful. 

• Companies wishing to provide their customers with an additional service. The owner of an online or mobile platform may offer his users a special service allowing them to transfer money to each other (according to a P2P model). It's a good chance to start receiving a fee from the payment service and win the gratitude of the customers.

By the by, some feel that person-to-person payment apps don't need a very high level of protection since transactions are often made between acquaintances and friends. However, you shouldn’t neglect a security issue (of which we’ll talk at length later in our article).

How it works

Even the most inexperienced person would easily figure out how to use these mobile payment apps: they don't require any special skills. To send money to somebody, you need to have your bank card (preferably with funds) and know the recipient’s card number. That's all, actually! You can transfer money from anywhere in the world, just by filling in a few simple fields. 

But let's start in order.

To perform the operation, it’s necessary to…  

• install the application and register in it;

• link your bank card to the app;

• fill in the page with personal data;

• select the recipient and enter information about him (usually his bank card number);

• specify the required amount of money and indicate the payment purpose (if necessary);

• send money and enter a password to confirm the transfer. 

Payment is being processed from several minutes to a couple of days, depending on the type of transfer.

Main types

We’ll start with the basic classification of p2p money transfers that mobile payment apps can make:

• internal transactions between users whose bank cards have been issued in the same country.

• cross-border transactions between users of different countries: fees are usually much higher, and the transfer limits are lower. 

However, we'll be more interested in another version of the classification: one that helps us answer the question: “How to create a mobile peer-to-peer payment application?”. As you'll learn later, it's impossible to implement the development process without a preliminary analysis of existing solutions. Let's explore them.

There are 4 main P2P payment app types:

• Banking solutions. The most farsighted banks decided to enter the mobile P2P payment app market and offered their own solutions to the clients. Surely, retailers must have special terminals to work with these applications, namely, POS devices with the capability to accept such payments, and this problem should be taken care of too. But the game is worth the candle, for people would definitely appreciate the possibility to resort to banking peer-to-peer payment apps.

• Independent Service Providers (ISPs). In fact, ISPs are companies that have established cooperation with acquiring banks (banks, which accept card details and process the money transfer). These banks have all the necessary licenses and accesses, and they’re willing to provide a ready-made service under certain conditions (usually through the API). Put the other way round, here we're dealing with mobile solutions that resemble a digital wallet with the possibility to store funds and make p2p payments, as well as perform other similar financial operations (depending on the functionality of a particular application of this type).

• Social platforms & Messaging services. You're surprised, aren't you? Yes, world-famous platforms, such as Facebook Messenger and WhatsApp, also decided to create an innovative payment app (or rather, they supplemented their app functionality with the p2p money transfer service). What was the reason, you may ask? Imagine: you're communicating with a relative or friend, and suddenly you recall you promised to send him or her some money. It'd be convenient for you to fulfill your promise right now, without interrupting the conversation to open the person-to-person payment app, do you agree? Luckily, today it has become possible (see below for examples of messengers offering this feature).

• Mobile OS. The last item on our list is the famous couple, namely,  Android Pay & Apple Pay. The creators of the world-known operating systems also allow their users to resort to peer-to-peer networks and make contactless payments. We guess you’ve used these opportunities more than once too!

Must-have features

So, you’re determined to create a mobile P2P payment app. It remains to understand what functionality your program should have in order to be able to meet competition and satisfy customers’ needs.

We're ready to share our opinion and provide several tips.

• Unique ID/OTP (which means ‘One Time Password’). Well, security always comes first, right? And if it's about money transfers and real-time payments, then you have to take care of data security all the more! It is for these purposes that you need to send your user a unique password or temporary PIN code (via SMS messages, emails, notifications, etc). If he or she confirms it, the transaction can be performed. Otherwise, certain measures should be taken. And if you want to further strengthen the protection of your money-transferring mobile app, consider sending the user such a one-off password every time he opens your program (just in case, to make sure you know who you're dealing with).

• Money transfers. Any mobile payment apps are needed, first and foremost, for safe, reliable money transfers. And remember, the whole process of transferring money from card to card shouldn’t require performing unnecessary steps. 

• Money request. Also, it won't be amiss to supplement the functionality of your service with the possibility to request money. Your users will find such a feature really helpful.

• Transferring funds to a bank account. Sometimes a person needs to transfer money from his card (say, those that he has just received through peer-to-peer networks) to a bank account. If your application helps him with this, he'll be very pleased. And it never hurts to please your customers.

• Digital wallet. You certainly have a wallet in which you carry your cash, business cards, and other important things, right? A similar wallet is needed for a person-to-person payment app. It would store data on the user’s bank cards, funds, and more.

• Invoice generation. Often, the client needs to have an invoice to confirm his payment (if he paid for the item and the seller wants to see proof). It means a customer must be able to generate an invoice and send it to the recipient (as well as store it in his digital wallet).

• Bill scanning. In addition to generating invoices, it may be necessary to scan the bill in order to send it to the right recipient. To do this, you’ll have to ask the user to open access to his smartphone camera.

• Transaction history. Another example of the cool features of money transfer apps is convenient access to the translation history. Believe us, it may come in handy in many cases.

• Money transfer templates. A lot of people have to make repetitive payments (say, monthly financial assistance to parents). And they would appreciate the opportunity to create the transaction template to resort to its help in the future (it would greatly simplify the entire process and help them save their time).

• Notification. Notifications help the user stay up to date with everything happening in his app account: successful money transfers, receiving funds, new discounts, system updates, and more.

• Mobile chat. The chat feature would allow the sender and receiver to discuss important payment details. Of course, they can always use Viber or another messenger, but it's in your power to simplify their communication.

• Support. And surely, the user must be able to contact the support team (he may face some problems when working with your service).

Benefits of the apps

Okay, why should you choose these solutions if you're a probable user, and why create them if you're a potential platform owner? Let's figure it out!

Additional income

First of all, let's not forget about the P2P app's monetization. There is nothing wrong with getting more money, do you agree?

Customer relationship improvement

Among the benefits to build a P2P payment app, in the foreground is the opportunity to improve customer relationships. 

As we’ve already mentioned above, many businesses would significantly enhance their reputation by offering their clients an additional payment channel. In the following items, we'll do our best to describe why users appreciate p2p transactions and, therefore, respect the companies providing them.

Time-saving

Do you remember the time when it was really time-consuming to send money to another person? You had to personally visit a bank branch, stand in a queue, and perform other similar and quite boring actions. When modern online transaction services appeared, the situation became much easier, but it remained far from ideal since we still had to enter a lot of data and fill in a bunch of fields. Luckily, peer-to-peer mobile payment apps have become an excellent solution to the problem! 

They save time due to the following advantages:

• ease of use: the entire transaction process requires only a few simple steps;

• convenient interface for communication and interaction with other users;

• high transaction speed;

• great service availability.

By the way, the last point is worth discussing in more detail.

Maximum service availability

Peer-to-peer payment solutions are available to everyone, anytime, anywhere, because they… 

• don’t have a territorial linkage. All you need is internet access;

• don’t depend on the time factor. Transaction service is available in a 24/7 mode;

• are supported by different platforms. So you’re welcome to choose any device you like to make transactions.

Minimum recipient data required

As we've said earlier, one of the benefits of a P2P money payment app is the need to know only a minimum of data about the recipient of the money transfer. This, among other things, simplifies and speeds up the transaction process.

Reduced fees

Users also value p2p payments because the fee is usually lower than the one set by other transaction intermediaries. So, by building a money transfer app of this type, you're helping your customers save a little.

System security

Any P2P payment is considered safe and reliable: security is ensured by the fact that the cardholder must be connected to the 3-D Secure system. Moreover, the service providing 3-D Secure service ought to have an international PCI DSS certificate.

How peer-to-peer payment solutions make money

As you understand now, there are many benefits of payment apps development, but let's not forget about the first one, namely, additional revenue. 

So, what options do you have?

1. Transfer fees, the most obvious way to monetize a payment application. You, as an intermediary, get your share of the fee the user pays.

2. In-app advertising. The main trick here is to attract the attention of advertisers and interest them in working with you. But bear in mind: users aren’t fond of ads, so don't overdo it. Stick to the golden mean rule.

3. Paid subscriptions, which can be presented in different formats:

   1. Mandatory subscriptions, when the user, after a certain free trial period ends, should pay to keep enjoying your mobile service. A trial period is required so that users would see the benefits of your application first-hand.

   2. Freemium model, when the user has a choice: he can either use the program at no cost or pay to get access to its extended functionality. The paid version should have more features and be ad-free.

If you approach the issue wisely, you'll easily recoup the cost to build a P2P payment app and even get a steady source of good income.

In one of our blog posts, we describe the 11 best payment gateways, which can be implemented in your Android app. Click here and read about them.

Now we’d like to figure out how to build a mobile payment system. It’s definitely high time to discuss the topic.

How to make a P2P payment application

Let's analyze the process of building a money transfer app point by point. Take a look at the basic development stages you won’t be able to do without:

1. Selection of the P2P payment app type. Previously in the article, we’ve described your main options in this respect. Take some time to measure up your possibilities before making a final choice related to the best way to implement your project.

2. Discovery Phase. The stage is needed to figure out all the aspects of the subsequent P2P payment app development process. Give your answers to a number of questions, such as:

   1. Who is he, your future user? What target audience is your platform focused on?

   2. What popular payment apps will you have to deal with and compete with? We're talking about conducting a competitive competition analysis.

   3. What platforms will your program support? The ideal option is to create a custom P2P payment app working with both iOS and Android operating systems.

   4. Etc! If you want to learn more about the important steps of the Discovery Phase, read our article on the issue.

3. Planning the core app functionality. We've already discussed P2P payment app features, so you can just follow our advice and implement them all. If your development budget is limited, start with the MVP model and create a product with the minimum number of the most important features. If your project proves successful, you'll be able to expand your service functionality.

4. UI/UX. The functionality of the application is important, but its interface also plays an important role, because it is the interface that is responsible for providing a positive user experience. After all, appealing and convenient P2P payment apps are more likely to attract and retain users.  

5. Ensuring proper app security. It’s about two-factor authentication, ID/OTP, PCI-DSS compliance, and other measures to protect money transactions. Consult with digital security experts to guarantee your application is trustworthy in every sense.

6. Thorough testing. Even the most experienced developers cannot predict whether the project is going to work flawlessly. Therefore, QA experts come to their aid: they must carefully test the application and, if necessary, send it for reworking (say, if there are some bugs needed to be fixed).

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An example of popular P2P money transfer apps

The first mobile solution of the peer2peer type is Venmo. And it still remains one of the most demanded and popular P2P money transfer apps.

But it has been written about too much and too often, so we'd like to discuss another application, namely, Zelle. Its example might inspire you to design a P2P payment system of your own.

Zelle

Zelle is a p2p money-transferring mobile app launched in 2017. More than 30 US banks work with the company that owns it, including such well-known names as Bank of America, J.P. Morgan Chase, and Wells Fargo.

Zelle is available to anyone who has a Visa or Mastercard debit card account, regardless of the financial services provider. 

Zelle has numerous advantages over other market players, especially in terms of speed. Money sent via Zelle will be obtained by the recipient almost immediately (although the operation of transferring money to a bank account usually takes at least one day).

Zelle proved the effectiveness of its strategy in the shortest possible time: in the first six months after the launch, its users had made about 100 million transactions worth $ 33.6 billion, which is more than double the Venmo result achieved over the same time period.

Another cool app of the P2P type is Azimo. And we've devoted a special article to it. Spare some time to read it!

How to succeed in building a money transfer app

A natural question arises: how to succeed in the market where such giants as Zelle, Venmo, and Azimo efficiently operate? We answer: the task is difficult but doable. Just be sure to pay attention to the factors listed below:

• Unique features of money transfer apps. In addition to using ready-made solutions, you'll have to develop some unique features. They'll help you distinguish your service from other competitors.

• UI/UX. We've written about the need to carefully think over the application interface more than once in other articles, and mobile payment apps are no exception. It should be user-friendly, intuitive, and modern.

• Regular updates. Also, if you want to create an innovative payment app, it's very important to follow technological trends and constantly improve your service. Never stop your attempts to become the best.

FAQ

What is a P2P payment app?

P2P stands for peer-to-peer or person-to-person. It is a technology for online transfers of funds from card to card. To carry out such an operation, it is enough for the payer to have a bank card and the ability to know one of the following parameters of the recipient: bank card number, email, or phone number. Or send a unique code generated by the P2P service through any communication channel to receive money on the card and check the balance.

Can I create my own payment app?

The payment app is a complex project and you will need a lot of resources, and you should hire a development team. Contactless peer-to-peer payments are presently considered to be niche segments and hence having expertise in these areas could prove invaluable to the development team. The trend towards electronic transactions shows that people are slowly moving away from using cash or cards to make payments and the development of payment and transactional software that reflects current user trends is essential to satisfy client needs.

How much does it cost to build a payment app?

Developing an application can be influenced by various elements, including team size, application intricacy level, or even platform requirements, and the functional capabilities and aesthetic superiority of medium-complexity applications (most apps on the App Store or Google Play fall into this category) are higher compared to less complex apps. 

How do P2P payment apps make money?

Cashless, cardless, and contactless fintech increase every year. The volume of direct transactions via mobile applications reached $785.19 billion in 2021. Building a contactless client-to-client application is a worthwhile investment as this volume will continue to grow in the coming years. With a successful outcome, you will be able to attract the attention of both current software users and non-bank groups of users with the right marketing strategy.

Are you ready to create a custom P2P payment app that fully suits your individual wishes? Then contact our experts, we'll be honored to take on your project!