How to Build a P2P Payment App in 2023: Moving Toward a Cashless Future

Technology continuously changes the world and our lives. Just 20 years ago, could anyone have imagined it would be so easy to have a video call with a friend in another country? Or to order food from restaurants? Or to send and receive money while sitting on the couch? It’s so popular that, according to IFAD, one in seven people send or receive money using P2P apps. Fun fact: June 16th is the International Day of Family Remittances (IDFR). 

In this blog post, we’ll cover the process of developing a P2P payment app from scratch. Read on to find out how to create an online payment app and learn about the different types and the advantages through our step-by-step guide.

What is a P2P payment app? 

P2P stands for “peer-to-peer.” With a payment app like this, a person can send money directly to another person’s wallet or bank account. Basically, the process is like this: you open the app, choose your recipient, type in the amount of money you want to send, and send it. There are no geographical or physical boundaries, and you can do it at any time anywhere there’s an Internet connection. What else can you do with these apps? 

• Pay for services (like a taxi or communications)

• Donate to organizations

• Support your loved ones

• Send and receive friend-to-friend borrowing requests

• Transfer money to family members in other countries

It sounds so easy and so many people are already using these apps. However, the process of creating an online payment app is much more complicated than using one. These services started in 2009, when Venmo was created, and we’re sure you’ve heard of PayPal as well.

Types of P2P payment apps

Let’s take a look at the different types of P2P apps to help you make an informed decision about what business model to choose for your future product.

• Standalone services

These apps have an all-in-one structure for fund transfers.

Examples: PayPal (426 million active users in 2022), Venmo (52 million active users in 2020), Airfox Square Cash, Cash app.

• Bank-centric apps

These apps use banks as an intermediary for funding transfers. With these apps, users complete transactions using their credit/debit cards.

Examples: Zelle app.

• Social media-centric apps

These apps allow users to send money using their social media accounts. Just imagine how convenient it could be when you’re chatting with a friend if you could send them money without even leaving the chat itself. In addition, this type of money transfer app doesn’t require any additional authentication to complete the transaction.

Examples: WhatsApp (by Meta; launched this feature in 2020), WeChat, SquareCash.

• Mobile OS-centric services

These apps enable users to send money to other users within an operating system. Users can also pay at stores where Point of Sale (PoS) equipment features NFC (near-field communication) technology. 

Examples: Apple Pay, Android Pay, Samsung Pay.

Advantages of payment P2P app development  

What are the reasons for the growth of P2P apps? They have many advantages over traditional payment methods. Here are some of the reasons users love them.

• Speed: Transferring money via payment apps are typically processed instantly, so you don't have to wait in line to transfer money. 

• Transparency: For currency exchange, users can often find a reasonable rate that is determined by overall demand, not by any government organizations or banks. 

• Security: Developers must be compliant with a strict policy that ensures personal financial data is securely stored and never leaked. 

• Ease of use: After downloading an app, all the features are just a few steps away. 

• Lower fees: Unlike traditional financial institutions, payment apps often charge lower or no fees, especially for international payments.

• Flexibility: P2P payment apps can be used to send money to anyone with a smartphone, regardless of whether they have a bank account.

• Convenience: Money transfer apps allow users to send and receive money quickly and easily, without the need to exchange cash or checks.

As a developer, future CEO, or product owner, what is appealing about P2P apps? 

• Organic growth

People tend to recommend the products and services they use to their family and friends. When they are excited about something, they tell others about it and then other people are willing to try it too. This word-of-mouth works better than any other form of advertising, according to 64 percent of marketers.

• Retention 

The success of this kind of product requires more than just a smooth UX and bug-free code. These things are just the base. The next step is to build a loyal community around the product, but once this base is built, users will continue to come back and are less likely to switch to a competitor. 

• The rise of digital remittances

The next section covers some interesting statistics in this area. 

Payment applications market overview 

Think with Google reports that 69% of smartphone users prefer using a payment app over a mobile site for money transfers to an individual. The main reason for this is the convenience of P2P apps, which enable you to send money with just a few taps. 

The increasing number of mobile devices in the world has changed the way we shop. According to Oberlo, three out of every four dollars spent on online purchases now are credited to purchases made via mobile devices.

Due to the improved convenience of mobile payment, these transactions have grown 26.63% from 2020 to 2025, and are expected to eventually overtake cash and credit card transactions in every region. 

Take a look at the following data and statistics to get a sense of the remittance industry. 

1. It is growing faster than FinTech companies. The number of P2P mobile payment users in the US reached 148.8 million people and is expected to hit 180.2 million by 2026.

2. It has a predicted CAGR of 5.7% from 2021 to 2030.

You can enter new markets with the same product and strategies by simply carrying out localization of the product and adapting the marketing strategy. A great example is the Paystack acquisition by Stripe.

Let’s look at the world’s most popular P2P payment apps

Zelle is considered the best P2P payment app for instant bank transfers as money is transferred directly into the user's bank account within minutes, and Zelle is compatible with a broad range of banks and credit unions (but unfortunately usable only within the USA).

Source: Zelle

Venmo (which is owned by PayPal) allows users to link their bank account or credit card to their Venmo account, and then request, send, and receive money from other Venmo users. 

Source: Venmo

PayPal is perhaps the most popular online payment service for online merchants and buyers, but other registered users can also use many functions. All you need to send money to someone is their username, email, or phone number.

Source: PayPal

Google Pay allows users to make purchases and money transfers with a digital wallet (available in the USA only).

Source: Google Pay

Apple Pay Cash allows Apple users to send and receive money in the Messages app, which is compatible with more recent versions of iPhone, iPad, Apple Watch, and Mac devices.

Source: Apple Pay Cash

Market trends for money transfer app development

If you want to stay on top of the market and attract more users, you need to keep up with the current market trends. They define what modern users expect from payment apps besides must-have features and what you should consider implementing. The most recent market trends are:

• Integration with other financial services

Many peer-to-peer payment apps are now integrating with other financial tools and services like budgeting systems, investment options, and rewards programs.

• Expansion into international markets

Payment apps are expanding their services to more countries and are adding support for a wider range of currencies. However, if you want to enter the international market, you also need to think about translating the app’s content to other languages and the financial laws applied in different countries.

• Increased use of artificial intelligence and machine learning

AI/ML is a rising trend in almost any tech-related industry including peer-to-peer transactions. You can use artificial intelligence to improve user experience, offer personalized recommendations, and enhance analytics.

• Use of blockchain technology

Some P2P payment apps are using blockchain technology to increase security and speed up transactions. Also, they allow clients to use cryptocurrencies to complete money transfers.

Tech stack, requirements, and team 

Who are the people that can turn your idea into reality? 

• UI/UX designers are responsible for making the user experience simple and enjoyable. 

• Business analysts conduct market research.

• Frontend engineers write the code for the platform you’ve chosen. 

• Backend engineers are responsible for server-side web application logic and integration of the work frontend engineers do. 

• QA engineers search for bugs.

• Project managers organize the work of the other team members and make sure everything goes according to plan.

Here is a list of recommended technologies for creating a native app. 

• For iOS: Swift 5, UIKit, MVVM+C 

• For Android: Kotlin, MVVM+C, Android Studio/Eclipse

• App distribution: Fastlane, Firebase App Distribution, TestFlight

• Admin panel: Node.js, React

• Payment gateway: Stripe, PayPal, Braintree, Mastercard, and other options

• Geolocation: Google Maps API, Mapbox

• Server: AWS

• Utilities: Firebase, Twilio, Facebook SDK, and Google SDK

• Notifications: Chrome notifications, Rest APIs, Amazon SNS, PubNub, and Firebase cloud messaging.

• Unique ID and OTP verification: Twilio, Rest APIs

• Digital wallet: Rest APIs

• Sending bills and invoices: 3rd party SDKs like Firebase, Twilio, Nexmo, Digimiles

• Sending and receiving money: Stripe, PayPal, Braintree

• Biometric authentication: Face ID and Touch ID for iOS; Biometric Authentication for Android.

How to create an online payment app: main steps

Now that we’ve covered the types of P2P apps, the feature list, and the tech requirements, let’s talk about the development stages. All of them are equally important and shouldn’t be overlooked.

1. Market and User Research

This step is fundamental for the success of your P2P app, yet many entrepreneurs fail because they didn’t conduct simple competitor research. According to Investopedia, lack of research is the third biggest reason why startups fail.

Make sure to include regional market and target audience research, as well as the analysis of what your competitors have done and what worked well for them. The results of this research should answer important questions like the following.

• Who is your target audience?

• What are their pains? 

• How can your money transfer app solve them?

2. Software Specifications

When you know what your users want, start creating the list of features that your users are looking for. We strongly recommend you first decide on the feature list for a minimum viable product (MVP). This feature list will include the core functionality that will solve the most acute pain points of users.

3. Prototyping

Whether you want to build a P2P payment app, build a mobile messenger, or opt for on-demand home services app development, you will need a prototype. A prototype is a rough implementation of your future app. Usually, it’s black-and-white and has almost no design elements. It allows you to stay focused on functionality and quickly fix core mistakes if there are any. Prototyping is a necessary stage if you want to test your idea before moving to full-scale development.

4. Design

In this stage, you’ll put the insights derived from stage 1 to use. We all know a smooth UX is important because it affects how users interact with your product, so, we won’t talk about that too much here. However, it’s worth mentioning that we at Yellow have a talented team of UX/UI designers who have the skill of empathy which is crucial and yet so rare. We understand how the user will interact with the P2P payment app and will do our best to make this journey pleasant and smooth.

Also, make sure to include UX writers from the very beginning of the design and development process. If they are involved in various textual aspects of the payment app such as messages for buttons, pop-ups, menus, and onboarding, they can make sure all the text in your interface is clear and well-written. 

5. Development

Finally, we start development! This is the stage when the magic begins and your team of professionals starts creating the peer payment app you envision. The list of features you choose will influence the final cost and duration of development.

You’re free to add additional features but here is a list of must-have ones you should definitely include:

• User authorization

It goes without saying that a P2P app must comply with legal regulations of the countries and regions they function in and be secure. This feature helps keep each transaction safe and prevent any third-party interference. Some authorization options include PIN management, passwords, and SMS codes. You can also make the first login harder and then allow users to choose an easier option.

• Unique ID/OTP (“one-time password”)

This feature increases the security of each separate transaction. When a user performs a transaction, the app will require them to enter a unique code (sent to their device via SMS, email, or push notification) to complete the transaction. However, this function should be as fast as possible: No one likes to wait for messages to come through and then waste time entering a code.

• Bill payments and money transfers

Well, this one is quite obvious, right?

• Account linking

This function allows users to link their bank accounts and credit/debit cards to make transactions even more streamlined.

• Invoice building 

This feature simplifies the lives of freelancers and business owners, so it’s found in many P2P apps. Besides, invoicing may be helpful even to the general public. With invoice building, users can generate invoices for other people to make a money transfer.

• Bill scanning 

This feature is used to scan a bill which can then be sent to a recipient.

• Transaction history and payment statistics

A crucial part of financial literacy is understanding your spending habits and analyzing where your money goes. When users see their transaction history in a mobile payment app, they will be able to better manage their spending and lifestyle. You can also implement a dashboard with statistics that will show the areas a user spends most of their money so they can adjust their expenses in the future if necessary.

• Notifications 

Notifications help users stay updated about everything that happens with their accounts so they don’t miss important information. You will also be able to notify users about important news and changes in your app.

• Mobile chat

This enables users to discuss details right in the app. 

• Customer Support

Users should be able to connect with your customer support department without leaving your mobile payment app. It will provide a better user experience and allow your support agents to answer their questions faster. Customer support can be assisted by chatbots who collect the primary information from users and answer simple inquiries along with human operators who are ready to help with complex requests or in later stages.

The next-level features for a P2P payment app include:

• Multiple security options

A PIN code and password are the simplest security options to implement for a P2P app, but they may not be enough. There are also more advanced solutions like Face ID or a fingerprint lock. It will ensure that no one except the device’s owner can access their financial information. Also, if the user information is extremely exclusive and sensitive, you can use two-factor authentication as a backup.

• Cryptocurrency and blockchain support

Blockchain and cryptocurrencies are quite controversial topics in the digital world, but their importance and influence on financial institutions are undeniable. If you want to engage with this part of your target audience, you can implement cryptocurrency payments. Also, blockchain can help users protect their information with smart contracts and automated payments.

Once you’ve decided on the list of features, set a timeline and try to stick with it. 

6. Testing

We recommend that you start testing your peer payment app as soon as possible so you can fix bugs quickly.

7. Security issues and compliance with regulations

The financial market is regulated but it depends on the region. Here are some examples of organizations that supervise legal regulations you must comply with within certain regions.

• The UK—Financial Conduct Authority

• US—Depends on the state

• European Union—Directive (EU) 2015/2366 + GDPR compliance

• Australia—Innovation Hub by the Australian Securities and Investments Commission (ASIC)

8. Launch

Finally, after all that hard work, your payment app is ready to launch. In this stage, you’ll get the feedback from real users which you can use to upgrade your app and add new features. That’s why we recommend setting aside some additional funds in your budget for feature extension, enhancement, maintenance, analytics, and monitoring.

How to find the right software development agency for a P2P app project

All above-mentioned stages can be completed by your in-house team if you have one. However, there is a chance that your own developers don’t have the necessary technical expertise to embark on a project like this. If you don’t have your own development team and don’t have the resources to hire one, there isn’t another option: You need to partner with a specialized agency. But how to choose the right one? Here are some simple tips for you to consider:

• Consider off-shore companies: If you are based in the US, hiring a software development vendor can be quite expensive. Consider teams that are located in different regions of the world. They can be less expensive but still provide the same level of quality and security.

• Take a look at the services they provide: Look for companies that can perform a complete development cycle, from ideation to launch and post-launch support. That way, you won’t have to partner with multiple companies to complete different parts of the project, will avoid communication issues, and will ensure better security.

• Portfolio: Most companies have a list of projects they’ve already completed on their websites. If the company you want to cooperate with doesn’t have experience in working with FinTech, you should consider another option.

• Customer reviews: You can find reviews on software development providers on platforms like Clutch and GoodFirms. Take into account that writing such reviews is not an easy process and not all clients are willing to leave them. So, if an agency has a lot of positive reviews, they care about their reputation and make effort to support it. No reviews or a lot of negative reviews speak for themselves.

P2P payment app development cost

The development cost varies widely depending on your team’s location. Let’s take a closer look with a simple calculation based on the estimated time spent on each stage.

Based on the figures above, developing, launching, and supporting a P2P payment app will cost anywhere from $49,620 to $98,650 depending on where your team is located. 

Monetization strategies for P2P payment apps 

Simply writing code and designing an app is not sufficient for a successful project. Choosing the monetization strategy for your P2P payment app is also a crucial step. 

• Transaction fees: You take a small percentage of every transfer made in your system. However, users don’t like this model very much since they will have to pay additional fees.

• Ads: You place an ad holder in your UI and charge advertisers for each show or click. Please note that you need to be careful with what you advertise. Financial services must maintain their reputation.

• Freemium: The basic functionality needed for users is available to everyone for free but some premium features can be used only in the paid plans. You can implement either a monthly or yearly subscription fee. This model is the most suitable for a P2P payment app since it can also incorporate elements of the other two above.

Pitfalls and challenges 

Now that you know about the advantages of P2P Payment app development, let’s talk about some of the challenges you may face.

Safety and Security

Every P2P app must comply with the Payment Card Industry (PCI) guidelines to ensure proper safety and security. These require your app to achieve the following.

• Securely store personal information

• Have strong access control standards

• Continuously update its security policies

• Regularly test and monitor networks

Compliance with regulations

Regulation for these types of apps includes regional or country-specific limitations, jurisdiction-related challenges, and mindset-oriented issues. When you want to create a P2P transaction app, you need to take them all into account.

Currency conversion

International payments can be challenging due to the 180+ active currencies that may require conversions. If it’s possible to enable direct conversion from one currency to another, implement it in your app. There is also a chance that users may need to make a money transfer from one foreign currency to another. Then, you will need to consider cross-currency conversion.

Dispute management

Money is a sensitive topic for most people, and they are not really willing to share personal and financial information even with payment apps. 

The bottom line

The remittance industry is booming and is expected to continue to grow in the future. With a well-chosen feature list, tech stack, design strategy, and professional team, you can create the next money transfer and P2P payment app that will make a splash in the FinTech industry.