Mobile Apps , Fintech ,

A complete guide on how to build a peer-to-peer payment app

A complete guide on how to build a peer-to-peer payment app

  • Last Updated on June 16, 2022
  • 18 min read

Raise your hands if you think you’re living in an awesome world today! With digital revolution changing almost every aspect of our lives, we all are saving time and efforts in one way or another.

peer to peer payment app main

For instance, you can do shopping sitting on your couch, hold meetings, discover new places, learn new skills, book tickets, and even send or receive money right from your smartphone.

Speaking of sending and receiving money, the P2P payment apps have really made their mark as an efficient p2p money transfer app along with a convenient and secure mode of payment.

So, what exactly are P2P payment applications?

Peer-to-peer payment system acts as a middleman that helps a person to transfer funds from their bank account to another person’s bank account with the help of an application called peer-to-peer applications.

Peer-to-peer apps have gained immense popularity among the youth who generally show more trust in sharing their financial data with third-party software as compared to the less tech-savvy older generation.

We saw, what P2P applications are, now, let’s see what are its types.

Types of P2P payment apps

1. Standalone services

These P2P vendors have their own P2P apps mobile solutions that facilitates money transfer. They all have a wallet feature that assists user to store their money before they offload it to some bank account or send it among their peer network.

PayPal and Venmo are the leading financial services in this category. PayPal tops the chart with its presence over 202 countries where more than 250 million users transact funds.

peer to peer payment app standalone services

While Venmo which is owned by PayPal is the fastest growing service in this category that has witnessed a tremendous growth in its total payment volume by 58% (approx.) in the second quarter of 2021 as compared to that of 47% (approx.) in the fourth quarter of 2020.

2. Bank centric

The peer-to-peer applications that involve a bank as one of the parties in the transactions are called bank centric peer to peer payment apps.

We can further divide this category into two types. One, in which the banks have their own mobile application.

Second, the peer to peer payment applications that transfer funds via different financial sector organisations such as credit unions, a financial security business, financial institutions and partner bank.

Zelle is one of the safest platform developed by top US banking institutes that matches all the safety standards of banking establishments.

Zelle app draws and deposits money directly into the bank account instead of any sort of account that has stored currency.

3. Social media centric

In recent years we have seen that many social networks and IT businesses have developed mobile payment apps. In 2015, Facebook launched its payment feature in its messenger where users can transfer funds without leaving the app.

Snapchat launched Snapcash four months before Facebook integrated the online payment feature. However, they had to shut it down on 30th August 2018.

Following Facebook’s path Google acquired Softcard, a mobile wallet platform which was a joint venture of AT&T, T-Mobile, and Verizon.

4. Mobile OS focused systems

In the past, customers tend to use old phones or error some devices to make payments which neither supports NFC technology nor contactless payments. But today, mobile OS systems have become a burgeoning trend as they make transactions quicker and easier for the customers. A good amount of customers pay their bills and do other banking functions across the globe.

With a mobile OS system, a service provider can stay on top of new cyber threats in real-time and alert customers as soon as they happen. It also decreases the likelihood of payment embezzlement.

How to P2P payment app works?

P2P payment applications are used for anything from splitting a dinner bill between friends to paying the landlord rent. These payments facilitate the transfer of funds between two parties. It will use their banking accounts or some payment method like a credit card, online banking or mobile app for this purpose. Here is a detailed workflow of a peer to peer money transfer app:

Go through the registration and Login

Setting up a peer-to-peer payment account is super easy ! No matter which platform you choose, you need to first sign up on the app by entering your personal details such as Name, Bank Name, Phone Number, Address, City, etc. After this, you need to enter a strong password or PIN.

Add payee

This is one of the most important steps of the peer-to-peer payment process. After completing your registration process, you need to fulfil the KYC process. Then you need to add the details of the person whom you want to pay. In this process, the user has to need the name of the person to whom he wants to make payment.

Define the amount

The user then needs to define the amount he wants to transfer. Along with this, the user can also write the reason for payment. However, this thing can be optional.

Enter the password to confirm the transaction

The user needs to enter the password which he had set at the time of signing up or he can confirm the payment transfer via OTP as well. Furthermore, the user can also set up a security question in case he forgets his password.

Payment receipt

After this, a payment receipt gets automatically generated which you can download or print. In this way, you can have a record of your money transactions.

Why you should go for P2P payment app development?

A custom P2P payment app allows instant transfer of funds without any geographical restrictions. Peer to Peer money transfer app solutions is aimed at making such money transfers that enable you to send money. Here are the reasons you should create a customised peer-to-peer payment system for your business:

Offer something unique

Offer users something unique to your customer with your custom peer-to-peer payment. If you own a banking or financial institution that demands the peer to peer payment service availability, a custom solution may provide you with features that will meet all the requirements as well.

Apart from this, p2p apps help retailers to streamline payments and cash to make timely payments to suppliers. Furthermore, it will boost straight-through invoice processing rates.

Faster payment processing

Remember the time when you have to spend hours in long lines at banks for money transfers. With the inception of peer-to-peer payment services, the situation became much easier. Peer to peer payment apps has reduced the need for filling a lot of data fields. Thus, it became an excellent solution to the problem!

Better transparency

Besides that, many users look after transparency in payments and P2P mobile apps can easily offer it. For example, in the case of currency exchange rates, you will more likely to get a reasonable here as it is determined by the frequency of demand, not by the government or bank.

Higher payment security

Any peer payment service is reliable and because of that security is ensured as it is connected to the 3-D Secure system. Moreover, the service providing 3-D Secure service ought to have an international PCI DSS certificate.

Minimal transaction costs

Peer money transfer app operators usually charge lower transaction or credit card fees from the customers as compared to other transaction intermediaries. In this way, by building a money transfer app, you could help your customers save a little.

Steps to build P2P payment app

To start a custom Peer to peer payment app development, you should seek the motivation to do so. If you want to create a payment app, the steps will be universal. Here are some essential steps that you need to keep in mind at the time of your peer to peer custom payment app development to get the best result possible:

Choose P2P payment app type

Initially, you need to choose the type of your P2P app from banking services and standalone service type. Apart from it, you can also opt for making apps that can support real-time payments. So think and make a firm decision accordingly.

Prioritize mobile platform

If your app budget is tight or limited, you can choose any one platform from Android or iOS. This will benefit you in two ways, first, it will save your p2p app development costs and second, it will help you know more about your customers’ interests.

Define the flow of P2P app features

Start building an MVP (minimum viable product) for your app first. However, you can add additional key features to your app later on.

Consider all security issues

Integrate security features in mobile devices and keep them activated. Face recognition, fingerprint scanners and other payment security technologies should be used. However, if a user’s device doesn’t support it, two-factor authentication should be activated at least.

Two-factor authentication is one of the most effective ways of resolving the payment security issue. Apart from the password required for authorization, it is necessary to one more authentication factor like SMS with verification code, for instance.

Build a user-friendly interface and UX

The User Experience and User Interface of your P2P payment app should be simple and intuitive. Your active users don’t want to waste time figuring out how everything works, it needs to be clear. So don’t complicate your app’s UI and UX.

Conduct proper testing

Testing is an essential thing for a p2p app’s success. QA engineers should perform every type of testing to help you fix the bugs at an initial stage. You can even find a team of volunteers that will perform beta testing of your app and its payment gateway.

FinTech app legal compliance

Payment Card Industry Data Security Standard or PCI-DSS should be followed if you build a FinTech app. That is why you should ensure that your P2P payment app complies with all the PCI-DSS requirements. Also, acquire a PCI-DSS certificate to create trust and transparency.

build mobile wallet app for digital payment

In the past few years, peer-to-peer payment applications have gained tremendous traction as compared to that of bank payment application.

peer to peer payment app why p2p apps are so much popular

The prime reason that accounts for these results is the fact that it allows the users to pay within a single tap on their smartphone.

Just link your bank account once with the app and enjoy a swift, secure, and convenient way of international transfers.

Features that should be in your P2P app

To build an app that facilitates peer to peer payments, the mobile app development company must include few critical features which would make their app a sure success. Without these features it’s almost impossible to survive in the current market.

User digital wallet

A Digital wallet is a place where user can store their credit cards or debit cards. Along with this, the user can store here his funds too. With the help of a mobile wallet, the customer can add money externally too. A user digital wallet also includes other core features.


This feature is useful as it informs the user whenever a payment is initiated or received.

Moreover, it notifies for every electronic wallet activity. In addition to that, person to person payment apps has extended their p2p services to send notification for bill due dates and ticket bookings.

Technological stack: Chrome notifications, Third-party APIs, Amazon SNS, APNS, and Firebase cloud messaging.

Send and request money

Payments are the core aspect of every small business or startup. No matter whether you are sending, receiving or requesting the payments from the customers, you always need a trusted payment solution that can keep your transactions secure.

Besides this, the business owner has to manage a lot of suppliers at one time which is a tough task. But by developing an outstanding peer to peer solution, you can manage your vendors effectively irrespective of their size.

Send bill, invoice

There must be a feature that allows the user to scan the bill to the person who has to make the payment.

Moreover, the app must generate an invoice of transaction which can be received by both sender and the receiver.

Technological stack: Bamboo invoice, Rest APIs

Transaction history

The app must have a basic feature that allows the users to see the summary of all their past peer-to-peer transactions made via the peer to peer payment apps.

peer to peer payment app transaction history

Technological stack: Rest APIs

Unique ID/ OTP

Every mobile finance solution must send a unique ID or OTP (One-time password), so that the user can verify it before any amount gets deducted from its wallet or account.

To make the users security even tighter, few P2P payment solutions also ask for OTP every time a user logs in the app.

Technological stack: 3rd party SDKs like: Firebase, Twilio, Nexmo, Digimiles

Transfer amount to bank

Generally, p2p users like it if the peer to peer payment app provides them the flexibility to transfer the money from the app to the bank account.

Each money transfer app has a different business model, according to which they charge a small transaction fee that varies for every app.

Technological stack: Dwolla, ACH

Fingerprint security lock

P2P payment apps are highly prone to risks as it contains important bank account details and credentials.

peer to peer payment app fingerprint security lock

Due to which it becomes imperative for a developer to provide a foolproof security to its app user.

They can do this by providing a fingerprint lock in the app. This lock will ensure that only the user of the app can access his or her account.

Technological stack: Biometric authentication, Optical fingerprint, multi-factor authentication, Capacitive sensors


Peer-to-peer payment solutions must have a chatbot that can address all the queries that may arise while transacting funds, wrong deductions from account/wallet, and in case when the user loses the internet connection.

Technological stack: 3rd party SDKs – Zendesk, Facebook messenger chatbot, Microsoft Bot Framework, and Amazon Lex.

Buy/sell cryptocurrency

Cryptocurrencies, especially Bitcoin has been the talk of the town for the past couple of year.

You must provide your users with a feature in your P2P digital payment apps that allows them to buy and sell cryptocurrencies efficiently and safely.

This feature can be a game changer as it will attract many people who possess a keen interest in the Bitcoin and other cryptocurrencies.

Technological stack: BitcoinJ SDK, Bitpay, and Coinify

Read more: 9 Ways to improve security of mobile banking apps

Challenges faced while developing a P2P payment app

No matter which type of digital payment solution you develop? There will be a set of challenges that you have to overcome. So, let’s have a look at these challenges.

For convenience, we have divided these challenges into two types which are.

1. Technical

2. Non-technical

Technical challenges

Security: It’s the biggest challenge that any wallet app development company has to face.

In past, the hackers have got better of the most renowned and secured international payments platform like PayPal, Cash App and NIC Asia bank.

Since these apps contain a huge amount of confidential payments data at one place, the risk is always larger and thus it becomes imperative for the P2P service providers to ensure foolproof security.

Comply with PCI DSS: It’s compulsory for all the brands which deal with the confidential banking data to follow and comply with PCI DSS compliances.

To comply with its guidelines, your solution must meet the below criteria.

  • Secure confidential information
  • Vulnerability management system in place
  • Build strong access control standards
  • Continuous testing and monitoring of networks
  • Update all the security policies
  • Maintain secure network and system

Currency conversion: Currency conversions are a challenge which is faced by all the P2P payment services.

It often becomes difficult to convert the currency in real-time as there are over 180 currencies functional in the world which contains different currency rates.

Moreover, one must Develop peer to peer payment application in such a way that cross-border transactions can be done in as shortest frame of time as possible.

Non – technical challenges

Regional limitations: One thing common with numerous mobile P2P payment app is that they are restricted by their geography.

To emerge as a top industry P2P apps must go beyond their geographical constraints.

The cases of dispute: There are number of issues which are related to peer-to-peer payment solutions.

For ex, when a user sends an amount to his/her friend and the other person doesn’t receive any payment even though the amount is debited from the sender’s wallet or bank account.

This kind of disputes can happen at any time and the developers who have already developed P2P app or are yet to develop one must keep this thing in mind.

Read more: How much does It cost to develop an app?

Slow changing mindset: It’s quite evident that peer to peer transactions made via P2P apps are more swift and convenient.

However, people are still feel comfortable using the traditional way of payments, i.e., through cash.

And the reason behind it is simple. No one would like to take a chance with the level of security of their confidential financial data.

Ways peer-to-peer payment solutions can make money

As you have read above in the blog about numerous benefits offered by a peer to peer development offers, but let’s not forget about the major one, namely, additional revenue. So, what options do you have?

1. Transfer fees

It is one of the most obvious ways to generate huge amounts of money from your peer to peer electronic money transfers as you will get your share of the fee that will be paid by your users.

2. In-app advertising

The core thing here is to attract the advertisers’ attention and keep them involved in working with you. However, please keep in mind that users aren’t fond of ads, so don’t bombard them over and over.

3. Paid subscriptions

There are two types of P2P payment subscriptions – Mandatory and Freemium. In the mandatory subscription model, when the user, at the end of a free trial, a customer should pay to continue their service. A trial period is required so that users would see the benefits of your application first-hand.

Freemium model, when the user can choose to pay no cost or pay to get access to its extended functionality. The paid version should have additional features and be ad-free.

Future of peer-to-peer payment apps

The market for the P2P payment apps is all set to see fierce competition with new players joining in the past few years have seen the rise of messengers that have in-built P2P payment services.

In the coming years, we will see many other promising changes.

The future of P2P payment apps looks brighter with possible integration of Blockchain technology and cryptocurrency.

Blockchain is nothing but a record of transactions. A record which is distributed among thousands of computers around the world instead of one person controlling it.

All those thousands of computers have to reach a consensus to make a transaction valid.

Each transaction made, is broadcasted to the network and the validity of those are checked by complex algorithms.

If it turns out to be valid then they are added to the record of previous transactions. The chain of transaction thus formed is called the blockchain.

With such pathbreaking advantages the blockchain powered P2P payment apps have already seen huge investments made by behemoths such as JP Morgan Chase & Co.

They have already filed a patent application with the US Patent and Trademark Office.


Peer-to-peer payment applications are redefining the way we do national and international payments in many ways and it will keep doing so in the coming years.

It’s increasing number of usage shows that people are slowly migrating from the physical form of money such as a cash card or a bank card to digital money, which perhaps is the future.

So, now is the best time to invest your time and money to develop a robust P2P payment app to gain the first mover advantage.

P2P contactless payments are still a niche segment which will undergo humungous transformation in coming years and you must want to be the first to adapt to those advantages.

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Tej Chalishazar

Tej is an experienced project manager with huge experience in mobile app development. He has worked on a lot of projects for various companies, ranging from startups to large corporations, and has successfully managed multiple projects from inception to launch. With a strong background in software development and project management methodologies, he is able to effectively communicate with cross-functional teams and stakeholders to ensure that projects are delivered successfully.

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