How to build payment apps: Practical recommendations

The demand for online payment solutions is growing as this type of financial app has become a standard in many countries. P2P transactions are gaining popularity, as they ensure high convenience for users and can bring a lot of benefits to merchants. In this article, we’ll explain how to build a P2P payment app and share our expertise in this domain.

P2P means “person-to-person” or “peer-to-peer”; such apps can be defined as solutions intended for making electronic money transfers from one user to another. The PayPal system is a good example; it was one of the first apps of this type, and today it is still one of the most popular apps for peer-to-peer payments.

Users’ app accounts are linked to their bank accounts, e-wallets, or credit/debit cards. And by indicating the recipient's account details, phone number, or email address, you can send money to this person almost instantly, even if this recipient is a customer of another bank. You can make a transaction under the terms set by the app that you use.

In other words, thanks to such solutions, there’s no need to deal with a bank or cash when transferring money to another person. All that’s needed is a couple of clicks (or taps) in your app. 

In simple terms, here’s how this software works.

1. A user creates an account by supplying some personal details, such as name, phone number, address, and bank name. Users will be asked to link their accounts on a payment app with their bank accounts or digital wallets. 
2. After registering, a KYC (Know Your Customer) process follows.
3. To send a money transfer, it’s necessary to add a recipient (or choose a recipient from a list).
4. Then, the user needs to indicate the amount to be sent and add a payment description if necessary.
5. To confirm a transaction, the app typically requires a password created during the registration process. However, there are alternative methods of transaction authentication. For example, an app can send a one-time code.
6. When a transaction is confirmed, the user gets an automatically generated receipt.

Of course, depending on the app you use, some details may differ. But what unites all solutions of this type is the straightforwardness of money transfers.

There are several types of payment software that allow users to conduct direct transactions. You can choose the one that will meet the needs of your target audience better than others.

1. Standalone service. This type of platform is powered by its own custom payment gateway. As a rule, such solutions have wide functionality that covers a lot of tasks, including but not limited to storing, sending, receiving, and withdrawing funds. Venmo and PayPal are good examples of such platforms.
2. Bank-centric solution. Such P2P products are launched and operated by banking institutions to facilitate the process of making transactions for their customers. These apps can be developed by one bank or a group of banks, like Zelle, which was designed by the top financial institutions in the United States.
3. Social media-centric payment tool. There are already lots of examples of such solutions, such as Snapcash or Meta Pay (previously known as Facebook Pay). These tools make it possible for users to send money directly from their social media apps. To do it, the app needs to be connected to a bank card or account.
4. Mobile OS-based app. Apple Pay and Google Pay are widely known examples of mobile OS-focused solutions. They are integrated directly into smartphones running on different operating systems. 

Thinking about how to create a mobile payment app, it’s worth focusing on the feasibility of such a project. Is it really worth your time, energy, and investments? To help you make a decision, here’s a look at the benefits a solution of this type offers your business and users.

• Convenience. Peer-to-peer payment solutions make it significantly easier for users to receive and transfer money quickly. and avoid dealing with the hassles of checks and cash. It’s possible to make transactions at any time and from any location without any concern about bank hours. All you need is a smartphone, tablet or PC, and an internet connection.
• Cost-efficiency. Such applications let users send and receive funds at a very low transaction fee or with no fees at all. This is a great advantage of P2P transactions in comparison to cashier’s checks and wire transfers.
• Speed of transactions. As a rule, P2P payments are processed practically instantly, which allows people to make transfers almost in no time. It is very helpful in many everyday situations when you need to quickly send money to another person, for example, when you want to share a restaurant bill.
• Automated record-keeping. Payment apps can offer users simple access to detailed transaction histories. Thanks to this feature, people can better track and manage their finances. Apps can also be enriched with tools for budget planning and savings.
• Additional revenue opportunities. For businesses that launch P2P payment applications, there is a range of monetization methods. For example, you can generate revenue by taking small transaction fees, establishing partnerships with merchants, and cooperating with advertisers. 
• Security. Today, developers can ensure the high security of P2P payment solutions by implementing encryption and other powerful tools to protect users’ funds and data. Many applications have security features such as PIN codes or biometric authentication. AI-powered security mechanisms are also gaining popularity. ML algorithms can detect any suspicious activities and deviations from standard patterns and immediately take the required measures (like declining a transaction or blocking an account).

When our customers come to us with questions about how to build a P2P payment app, they always want to know the cost of their project. Project budget is a very important thing that should be discussed in advance to avoid a situation where a project has to be frozen  because the company has run out of funds. 

But it’s impossible to name even an approximate cost without analyzing your idea and project requirements. A whole range of factors may have an impact on the total cost, including:

• Type of app;
• Its complexity;
• Required integrations;
• Chosen tech stack;
• Size and composition of the team that will work on your project.

And don’t forget to include marketing costs in your budget planning.  It’s not enough just to build a cool solution; you have to promote it in the right way.

According to some estimates, marketing efforts will cost 2 to 3 times what you spend on development. But, given the popularity of such solutions, investment in a high-quality product will pay off.

Any software development project will be carried out in several stages. The importance of every step shouldn’t be undervalued. Here are the basic stages.

1. Project idea and concept. Define what tasks you want to solve with your app, who will be its target audience, and what expectations these people have. Analyze existing apps, study reviews, and identify what will make your product unique.
2. Discussion of requirements. Discuss the concept with the development team and formulate your requirements for the future product.
3. Planning. The team will consider all the received information, choose the development tools and approaches, and set the timeframes.
4. Design and development. This step is usually the most time- and effort-consuming one. It is devoted to transforming your idea into a real product. While designers will be creating eye-catching interfaces, developers will be building the necessary functionality.
5. Testing. Your P2P payment app should be thoroughly tested, especially in aspects related to security. There are different types of tests that should be conducted in parallel with development. But when everything is ready, and all bugs are fixed, it’s time for regression testing. This will demonstrate whether everything works well together after all changes.
6. Release. When you are satisfied with the results, your app can be made publicly available on marketplaces.
7. Post-launch support and maintenance. Even after the release, you’ll need to continue working on the app. Specialists should constantly monitor its performance to detect any vulnerabilities and address them immediately. Payment apps also require regular updates to be performed in accordance with feedback from users.

If you don’t have the in-house resources for building a payment app, you’ll need to establish cooperation with a reliable outsourcing partner. Today, there are a lot of companies that offer very similar services, which means you need a good understanding of the factors to be considered before making your choice. Here’s a short checklist for your convenience.

1. Relevant experience. Before establishing cooperation with a team, make sure the  developers have strong expertise in working with the required technologies and building solutions for the chosen platforms. 
2. Successful projects in the chosen domain. It’s always a good idea to look through the company portfolio to see what types of tasks the team has been able to solve successfully.
3. Reviews. We recommend reading reviews written by customers on platforms such as GoodFirms or Clutch. This will help you understand any potential pitfalls.
4. Reasonable rates. Check average rates in the chosen region. Too-low or too-high rates can be a warning sign.
5. Comfortable engagement models. Modern business models maximize flexibility, which means everyone can find the most appropriate option. If a company’s way of working with you doesn’t seem suitable for your project, it’s better to look for another partner.

It’s vital to clarify all of this before making a final decision. So don’t hesitate to contact companies and ask lots of questions.

Our team provides mobile app development services to customers in various business domains, including banking and finance. Over the years, we’ve accumulated valuable expertise that allows us to deliver advanced solutions of many types.

One of the projects in our portfolio is a mobile app developed for a major Kazakhstan bank. The app, dubbed Altyn-i, was expected to help customers perform as many banking tasks on their mobile phones as possible, including making money transfers, managing funds and accounts, sending applications for loans, overseeing savings deposits, etc.

The bank wanted this application for iOS and Android platforms to become a payment aggregator for all transactions and to enhance the quality of its customer service. The bank also wanted to enrich it with additional services for non-clients.

The range of requirements and desired features was rather wide, while the deadlines were very strict. Given all this, we suggested releasing the first version of the solution with a minimum set of tools within six months and then gradually introduced the updates.

To ensure the best data protection, we implemented powerful identification and authentication mechanisms (including verification by SMS code, fingerprint, and ID scan), one-time passwords for transaction confirmation, 3D Secure technology, and the possibility of setting up limits on card payments.

You can read more about this project by following the link.

Today, developing a payment app can be a good investment. The role of such solutions in the digital economy is growing, leading to mass adoption. People look for reliable products that will guarantee quick transactions, convenience, and complete security of their data and funds. If your app can meet these requirements, it has a high chance of succeeding.

At Cogniteq, we have impressive experience in building software solutions for the finance market and we are always ready to help you realize your project. Feel free to contact us and learn more about our services.