Transferring money from point A to point B sounds easy on paper. In practice, the process is simple only when it’s two people who are close to each other and have enough cash. Money transfers can be quite a hustle, especially if it’s an international transfer, and it’s neat when software can handle this hustle for you. That’s why peer to peer money transfer apps are such a big deal in the world in general and in the fintech sector in particular. And the more society moves into the cashless direction, the graver the need for quick and convenient P2P payment apps. Therefore, local markets crave relevant payment software that can meet the demand of customers. And, if the niche is free or the present options are insufficient in some aspects, you can develop one and enter the fintech arena yourself. Creating a P2P payment app is also quite a hustle though, but don’t worry, we’ve got you covered.
In this article, you will learn about features of money transfer apps, challenges developers face while building P2P applications, a description of some popular payment apps, ways of P2P apps monetization, and the best method for determining the price for developing such an app.
A Profile of a Common P2P Payment App
A P2P payment app is an application that performs online money transfers from one app’s client to another app’s client. A P2P payment app is a willing horse of the fintech industry. Such apps handle different work that varies from your casual ‘Friday evening with friends’ money transfers to bigger international payments for friends/relatives abroad (though not all apps provide such a possibility). In addition, the apps can be used to pay for home utilities, services, and online purchases. At their core, money transfer apps are simple and straightforward pieces of tech. Their primary function is to make money transfers as simple and fast as possible. Worth mentioning though that the majority of the payment apps don’t allow transfers for business purposes, and even if some do, the fees can be quite significant.
Therefore, a well-rounded P2P payment app
– Is created for personal use, so should have a ‘personal’ feel to it with the possibilities to customize the user experience and visuals, intuitive workflow, and pleasant design.
– Is connected to a user’s bank account or debit/credit card depending on a particular payment’s app requirements and policy
– Provides fast money transfers. Though, depending on the type of transaction (international, local) or how the app handles payments, the transaction may take some time.
– Allows canceling a transaction within a certain timeframe
– Contains history of previous transactions
– Sends invoices or bills
– Is well-protected
– Has to chat
– Has push notifications
– Has multi-factor authentication
Besides, some P2P payment apps may provide the possibility to exchange currency, provide microloans, and international money transfer services. An important thing to remember here is that money transfer apps continuously evolve, offering a broader spectrum of services, providing more convenient ways of performing operations, and, overall, making the world of cashless society a more accessible and attractive place to be.
Benefits and Challenges of Building a P2P Payment App
If you know or feel that there is a viable opportunity to enter the market of money transfers by developing your own app, you will have the following P2P payment opportunities for yourself:
Popular and lucrative niche. As we’ve written in our article “How to Make a Digital Bank Like Monzo,” the fintech industry reigns supreme in the tech world with a staggering $118bn of investments. And, there’s not a functional fintech ecosystem without convenient money transfers. According to Business Insider, “digital peer-to-peer payments are becoming a new social norm” with expectations for “mobile P2P to rise to $336 billion.”
Great prospect for app evolution and scaling up. The fintech sector won’t be slowing down its stunning pace anytime soon. It means that if you can keep up with its pace and ensure the relevance of your product, your business will have a staggering potential for growth and attraction of new customers.
Significant investments. As you see, investors absolutely love fintech. Therefore, with a proper approach, you will have no troubles funding your product. Our experience demonstrates that an MVP (minimal viable product) or other relevant deliverables are enough to attract investments.
Novel technologies. According to P2P payment apps specialty, they should work with cutting edge technologies to ensure the protection of transfers and security of customers’ data. If you create a fintech product, it means that your team will be constantly cultivating proficiency and experience in some of the most promising areas of software development.
However, if you decide to create a mobile P2P payment app, there will be some considerable challenges to overcome as well.
Some of these challenges are the other side of the coin of the aforementioned benefits.
Dense competition. A popular and lucrative niche is great, but it comes with hungry competitors who want the bite of the fintech pie as badly as you do. Therefore, you need to be at the top of your game to overcome them.
Security concerns. Dealing with payment apps is a perspective in regards to technologies, but it requires an extremely cautious approach to security. Developing a well-protected P2P app is a feat of software development prowess that calls for an experienced dev team.
Regulations. There are strict regulations regarding money transfers that vary depending on a country, the type of transfer, the sum of money sent, etc. Your instant P2P payment app will have to follow them thoroughly.
High standards. Fintech apps should be an embodiment of the best that a mobile application as a concept can offer, providing sleek intuitive design, bugless functionality, great support, and high-load capacities.
Overall, P2P payment app development is a long and complex process that will involve various stages, such as research and business analysis of the idea, research of regulatory environment, design, planning of secure back-end architecture, software development, quality assurance, support & maintenance.
Examples of P2P Payment Apps
Let’s check out some of the most popular P2P money transfer apps the world has to offer.
Venmo — Casual Transfers
Venmo is a mobile-first P2P payment app that operates in the USA and serves the US residents only. The software is owned by PayPal. Unlike the latter, Venmo is created to make purchases and send money to friends and acquaintances. A user can connect a bank account or credit/debit card to Venmo. The app doesn’t put any fees on its casual transactions but charges a 3% fee on transactions made with a credit card.
OFX — Overseas Payments
OFX is a 20yo money-transfer app that allows sending money to more than 190 countries in different currencies. On top of that, OFX offers a real-time currency exchange tool that allows choosing the most beneficial exchange rate. The app is created for bigger money transfers, so the minimal sum for a transfer is $1000 (OFX’s alternative — TranferWise — doesn’t have such a limitation but operates in fewer countries).
WorldRemit — Smaller Overseas Payments
WorldRemit is similar to OFX but operates in 119 countries and is great for transferring lesser amounts of money. It offers fast transactions, no limitations for transferring money, and straightforward user-flow. It’s simple, fast, and reliable. WorldRemit fees vary depending on the type of currency used and the country. The amount of money to send varies from $4 up to $25.
How to Monetize a P2P Payment App?
The most prevalent methods of monetization of money transfer apps include
Transaction fees. Some apps put fees on all transactions, others — only on certain types of transactions. For instance, OFX puts a fee on transactions made with amounts of money under $10.000.
Interest rates. Some providers, such as PayPal, make money by earning interest on the money left in accounts they serve and by charging merchants that use the service.
Premium subscriptions. Some companies offer premium features for a monthly subscription fee. For instance, Revolut offers better fees and free cash withdrawal.
Exchange rates. Some P2P payment companies earn money on foreign exchange rates.
How Much Does it Cost to Build a P2P Payment App?
Developing a P2P payment app is similar to developing any other complex and security-heavy application. It requires several stages of development. The process depends on the stage of the idea’s preparedness and overall complexity of a product. The best way to measure the costs is to find a software development team that is capable of conducting a thorough cost estimate.
In case if the idea of creating a money transfer app is in its initial stages of development, the Discovery Phase can be quite handy. At KindGeek, the Discovery Phase is a complex business analysis procedure that involves BAs as well as UI/UX designers and software engineers.
The discovery phase will not only provide you with the most accurate estimates of future costs but will deliver, depending on the chosen package,
– product concept from Product Manager
– prototypes from Business Analyst
– a visual concept from UI/UX Designer
– architecture concept from System Architect
– estimates of development costs
With extensive experience in mobile development and fintech app creation, we can estimate the costs, help you build a reliable money transfer app, or conduct the discovery phase. The latter will determine the price and provide you with the above-mentioned deliverables that can be used as a solid foundation for the further development of the product or attracting investors. If you ever wondered “How to build a P2P payment app?” We have all the answers you need.
If you are interested, contact us.