Money Transfer & P2P Payment App Development Guide 2023

Konstantin Kalinin

Head of Content

January 18, 2023

If you’re looking for info on how to create a mobile payment app, here’s a good place to start. I’ll take you through all the steps and share the best practices around security, design, and other aspects of the p2p payment development process.

I promise you’ll walk away with enough insights to create a payment app that has a genuine potential to trump the competition.

Top Takeaways:

• By the end of 2022, almost half of smartphone users in the U.S. will transact via p2p mobile apps.
• The most promising p2p payment solutions include transactional platforms, crypto-based p2p mobile wallets, messaging-based payment apps, and standalone p2p mobile applications.
• The secret sauce to launching a successful peer-to-peer mobile payment app is an experienced agile team, prototyping, and releasing an MVP with a trackable referral program.

Table of Contents:

1. Modern P2P-Topia: Market Trends in Money Transfer Apps
2. Step1: Before You Call a Mobile Payment App Development Agency
3. Step 2: Design the App’s Architecture
4. Step 3: Craft the App’s UI/UX
5. Step 4: Behind the Scenes of P2P App Development
6. Step 5: The App is Live – Now What?
7. P2P Payment App Development Best Practices
8. Cost of Developing a P2P Payment App

Modern P2P-Topia: Market Trends in Money Transfer Apps

As you probably know, “p2p” in “p2p payment app” stands for peer-to-peer or person-to-person, which means we use such apps to transact with people we know.

Only recently, some p2p payment apps have been adding business payment options, effectively turning p2p into p2b (peer-to-business). That’s definitely one of the trends with payment apps, and we’ll discuss it below, but first, let’s look at the different types of p2p payment apps that exist today:

• traditional mobile banking apps
• standalone p2p payment apps
• payment platforms
• crypto payment applications

Traditional mobile banking apps

Whether you use Wells Fargo, Chase Mobile, or any other mobile application from a bank or credit union, they all have an option to send money to your friends and family members. Some call these p2p apps “bank-centric,” but they are just bank-owned.

The p2p payment feature per se is but an option in these mobile banking apps, and it’s often not very handy, especially if people you transact with bank in a different institution.

Related: Mobile Banking App Development Guide

Standalone p2p payment apps

Services like a Cash App and Venmo focus specifically on payments and act as digital wallets, often come with a debit card and/or connect to an existing bank account. Put simply, these services exist to offer users more flexibility with managing their money.

They may have different perks, but the main premise is to let us transact effortlessly with people we trust, using built-in e-wallets. We can add existing bank accounts or create new ones, etc.

You can find more info on how to make a mobile wallet app in a separate blog.

Payment platforms

Zelle is the most prominent player in this niche. While the product exists as a mobile app (in fact, overly simplistic), Zelle is much more than mobile software for real-time payments.

First and foremost, Zelle is a platform with a robust back end and APIs that allows for interbank electronic money transfers between individuals right from within their online banking apps.

Crypto payment applications

Any crypto wallet app is already a p2p payment application allowing people to send and receive crypto as cross-border transactions. Still, you’ll need to spend a lot of time trying to find a p2p payment app for crypto as elegant and straightforward as, say, Venmo or PayPal.

There’s a lot to handle because different crypto tokens and coins have unique addresses, and you still need to handle payments via QR codes or type in long strings of symbols (without 100% recipient verification) to send funds.

We discussed how to develop a crypto wallet app in a dedicated blog.

Messaging apps with built-in payments

This financial sector is dominated by Facebook Pay, which works in all company’s products and requires existing banking products to transact with friends, run a fundraising campaign, or donate to creators.

The key differentiation here is that payments are tightly integrated with a chat. By the way, the only way for p2p payments in Apple Pay is also via messaging.

Google/Samsung/etc. Pay

I consider Apple, Google, Samsung, Android Pay, and similar payment services a stripped-down version of traditional banking apps. They do have the p2p payment functionality, but like with banking apps, it’s just another option, and the core features are for paying large and small businesses.

People love P2P payments

COVID-19 certainly played its role in popularizing p2p mobile payment systems. When cash changing hands is frowned upon for being inconvenient and risky for health, digital transactions become the only viable alternative.

I don’t want to overburden you with statistics, but here are just three key facts proving that p2p payment app development is a very lucrative direction:

• eMarketer expects over $1 trillion in transactions via mobile p2p payments in 2023
• more than 113 million adults in the U.S. use peer-to-peer payment solutions
• total payment value on Venmo grew by 65% from 2020 to 2021

Trends in p2p payment applications

Modern mobile p2p payment solutions continue to branch out with more features, opening up new use cases and simplifying digital cash flows. Here are some trends to inspire you as you build a money transfer app:

• payments built into chats
• voice interfaces to transfer money (Siri, Alexa, Google Assistant)
• contactless payment methods (QR, NFC, Bluetooth)
• payments to sellers (besides the trusted circle of people)
• options for cashing in checks remotely
• branded credit cards
• rewards and bonuses
• basic crypto trading
• minimal or zero transfer fees
• currency exchange rates
• showing investment profits and losses

If you want my opinion, I envision innovations coming from banks starting to accept crypto payments and partnering with startups that offer novel ways for exchanging digital cash between people. Another growth area is adding trading options and family savings accounts.

Here’s a crazy idea for a crypto-based p2p payment app. A customer sends a payment to her friend. The p2p payment service she uses converts her funds into crypto and performs AI-assisted arbitrage trading on crypto exchanges, increasing the initial transaction value. The company then splits the profit with the receiver of the initial payment. In the end, the customer’s friend receives 5-10% more than the original amount sent. That would make payments last a little longer, but imagine the game theories you could employ here. Users could agree on how long they are willing to wait for the payment to arrive, and the interest would increase proportionally to the wait time. Anyways, just an idea for online payment transfer app development.

Step 1: Before You Call a Mobile Payment App Development Agency

Before you actually begin to build a p2p payment app, there’s a lot of things you need to clear up. It all starts with defining your strategy.

1.1: Strategize around your business model

As with any product, whether digital or not, you need market research: study your target audience and find out about their unique needs and the context for using your solution. That will help you refine your unique selling proposition and zero in on the perfect product-market fit.

• Who will use your app?

Do you create an app for money transfers for families, millennials, senior people, or an entirely niche group like stay-at-home moms and dads? Is your app going to be international or local? The more demographic characteristics you have, the deeper should be the analysis of the needs of your target market.

• When and in what context will users refer to your product?

On-the-go is just one scenario, and you can certainly go deeper, e.g., by reviewing what situations urge people to use the app, how often, etc. Will they use the app for on-the-spot, face-to-face transactions?

• How will you monetize your solution?

Many startups often put off discussing their monetization options. However, it’s strongly advised to know how your app will make money from day one.

Related: App Monetization Guide: Tips, Tricks and Best Practices

This research will naturally cover studying your competition. You’ll find a lot of helpful info on trusted software review sites, in app-store reviews, etc.

Obviously, to start a money transfer app generating real traction, you need to come up with some novel use cases. Otherwise, it will be hard to steer new customers away from already established market players.

Let’s say we want to build a shared cash pool for friends where each member can borrow once a month in turn. The longer you don’t borrow and the more you’ve contributed to the pool, the bigger loan you can claim when your turn comes. At the same time, the pool keeps generating a monthly interest distributed among all participants. The bottom line is think of an exciting killer feature (currency exchange?) to make a peer-to-peer payment app that really stands out.

1.2: Research regulatory requirements

Of course, we can come up with ideas like I mentioned nonstop. However, the feasibility of your solution will largely depend on regulations. Cross-border money transfer apps face the most significant challenges simply because they need to comply with regulations in every single geography where they plan to operate.

Therefore, it’s best to start with the U.S., and more specifically, with particular states. Make sure your development partners are comfortable working with PCI DSS (the Payment Card Industry Data Security Standard).

1.3: Secure key partnerships

Let’s face it: you can’t make an app like Venmo without securing a partnership with a credible financial institution that supports bank payments.

Every major neo banking app emerged backed by a traditional bank, and many continue to run along these rails.

Related: How to build a neobank app

So evaluate your options and seek key partnerships that will secure the core payment app features.

1.4: Choose a development partner

Once you’ve identified your app’s product-market fit, reviewed legislation barriers, and discussed it with potential partners, it’s time to hail software developers.

What team composition do you need to develop a money transfer app? Well, it will take some talent:

• UX/UI designers
• Full-stack developers for creating the server-side
• Mobile developers to build apps for smartphones
• QA engineers to sift out errors
• Project manager to coordinate the whole team
• Product manager to keep the end goal aligned and collaborate on your product’s vision

A battle-tested team versed in fintech app development services will help you polish your lean canvas, taking into account the technological and business challenges of the envisioned product.

We love to kick off projects at Topflight with what we call a collaborative pre-flight workshop. We help you craft a lean canvas, prioritized list of features aligned with ROI expectations, and strategic roadmap during the workshop.

Step 2: Design the App’s Architecture

In practice, the next two steps I will describe happen side by side, simultaneously. So there’s absolutely nothing stopping you from defining the app’s architecture and simultaneously designing its user experience.

2.1 Who orchestrates the p2p payment app’s architecture?

That’s possible because “architecture” in this case means identifying the main building blocks of the solution and choosing the most appropriate tech stack for this structure. You will need someone of a CTO (chief technical officer) caliber, backed by lead mobile developers for this task. As for the design phase, which is taking place simultaneously, we’ll discuss that in the next step.

• architecture and design can happen simultaneously
• you need a CTO and lead developers for the task

2.2 How does that really work?

It’s like when you build a Lego castle with your kid; you pick bigger parts to lay down the foundation. Same with software architecture, only instead of bricks you choose programming languages, frameworks, databases, APIs, cloud services — in a nutshell, everything that breathes life into your solution.

Considering you have chosen a qualified development team to create a p2p payment app, it will help you make the right decisions about your app’s architecture:

• your app for money transfer should scale easily
• the platform should feature top-notch security
• ideally, the software should easily integrate with other financial services

What are the primary building blocks that make up the architecture of a p2p payment app? Well, there are quite a few. On a high level, depending on the intended app functionality, you’d have to look at:

• p2p payment protocol (for payment processing)
• multiple databases (for the apps and internal monitoring and other services)
• risk assessment module (AML, anti-fraud)
• authentication service (plus KYC)
• mobile and web user front ends
• multiple internal and external APIs; API gateways
• app performance monitoring
• a logging instance

This list may sound a little intimidating to a business owner, especially when they discuss it with software architects in detail. However, at a very high level, it’s just apps that customers and employees work with, databases, and many tools to interconnect the data with user interfaces and analyze it.

2.3 Questions to bounce off your p2p payment app developers?

Ultimately, the tech stack and architecture specifics will depend on your developers’ strengths and expertise. At the same time, they develop a payment app according to your vision. So you kind of guide them (with the right team, it’s a collaborative process) through this process, asking questions that matter most to end-users and the platform owner.

• How many transactions should we be able to process per second out the gate?
• How many users does it take to bring the system to a screeching halt?
• How quickly can we scale up?
• How many layers of protection do we need to set up to secure the software?
• How do we ensure our app can integrate with this or that service to introduce new exciting features later down the road?

Simple questions like these lead to fundamental decisions about your p2p payment software structure.

2.4 Friendly advice

What tech stack is best? As you probably know, many startups have to pivot during development or shortly after releasing an MVP. So a word of advice here is not to lock yourself into technologies you won’t be able to change later unless you’re 100% sure about your roadmap.

Related: MVP App Development: Best Practices, Steps, Tools

• opt for an open-ended tech stack that will last minimum for a decade
• refrain from brand-new technologies not providing enough edge over competitors

Another suggestion is to think outside the mobile platforms. For example, voice assistants work across many devices, not just smartphones. You may want to create a single API to connect with Siri, Google Assistant, and Alexa.

You can find more advice on how to build a fintech app in a separate blog.

Step 3: Craft the App’s UX/UI

The next stage is rapid prototyping. The idea is to create an interactive graphical shell of your app that anyone can click through and understand how it works. Note that the UX/UI creation can happen simultaneously with scoping architecture.

3.1 Who does rapid prototyping?

At this point, you mainly engage with UX/UI experts who visualize your concept, adjusting it to the target audience’s tastes and needs. However, developers’ input is also required. They assess what features are feasible on a given mobile platform and help find the most appropriate approach to honor Apple’s and Google’s interface guidelines.

• designers
• mobile developers 

3.2 How do you run prototyping?

You’d then use this prototype with test users matching your demographics to see how they interact with the software. As a result, you get insights that you can use to rehash the prototype and verify that it’s easy to use and effectively addresses users’ needs.

In other words, users need to move between screens seamlessly and be fully aware of what’s going on and what to expect.

• gather feedback from test users
• iterate on the prototype to achieve the ideal ease of use

Once you’ve cemented the user-friendly UI/UX of the app, designers will need to mark up all graphical assets and make them ready for developers, i.e., design hand-off kicks in.

Related: UI/UX design guidelines to build a successful app

3.3 Why do you need prototyping at all?

Here’s the big WHY you need to start with a prototype. Fleshing out the graphical shell of an application and connecting all screens together via “hot points” is nowhere near as costly as coding the actual app. Plus, prototyping takes considerably less time than coding.

• prototyping is less expensive than coding
• helps cement the product-market fit

Step 4: Behind the Scenes of P2P App Development

At this point, you should have:

• Lean canvas
• Polished design
• Well-researched architecture blueprint

You are now well-positioned to start money transfer app development. Instead of lamenting how business owners often find this step boring, let me tell you what it looks like from the inside.

4.1 Who makes a peer-to-peer payment app?

This phase is when developers fully move into the spotlight. Mobile developers make a payment app in Android and iOS, full-stack engineers code the back end with databases, APIs, and front end developers build browser-based money transfer portals for customers and admins (with user management modules).

Developers are soon joined by QA engineers, who help them set up a testing environment and look for any visual and functional glitches in the software.

To coordinate everybody’s efforts, there must be a project manager, who tracks the team’s performance on a daily basis. And there’s also a product manager who makes sure that whatever is being developed remains aligned with the business owner’s vision.

• mobile/full-stack developers
• test engineers
• product/project manager

4.2 How does agile p2p payment software development work?

Full disclosure: we are an agile shop. So if you engage a development agency on a fixed-price basis, the scenario will be different.

With agile, the process is pretty straightforward. The team creates a backlog of all tasks, plans two-week sprints, and executes on the selected tasks while also analyzing their performance during past sprints.

Project managers ensure you get full access to our internal processes to always be aware of what is being worked on. As we move from sprint to sprint, you start getting early versions of the apps and documentation, which guarantees the project longevity.

Once we have a stable market-ready version of the software, we can release it to the public. That usually takes about a week because we need to deploy web apps to a production environment, upload applications to app stores, and test all functionality once again.

A couple of things you need to know about agile specifics:

• your vision may change later down the road based on the market reaction to MVP versions
• accordingly, designers may need to step in to provide UX/UI enhancements
• the agile cycle for successful projects (build > test > release) never really ends, only slowing down or intensifying instead
• the maximum and minimum hourly effort (based on involved resources) may fluctuate throughout the project

Related: Agile App Development: How to build a winning app

This agile approach allows us to bypass a slow and often misguided specification phase, cuts time-to-market, maximizes the role of your customers in shaping your p2p payment app, and overall ensures smooth and efficient delivery.

Step 5: The App is Live – Now What?

Typically, business owners don’t think much post releasing a product when they create a money transfer app. Funny thing, the party only breaks up once you release your p2p payment application.

First of all, you will definitely spot opportunities for improving your app based on user feedback. That may have to do with altering user flows a little or introducing new features (e.g., adding a borrowing request option, etc.).

Second of all, Apple and Google will at some point release new mobile OS versions introducing new options that your software can make use of.

Put simply, development work never stops for successful products. Developers, designers, and testers keep churning new versions behind-the-scenes. Some mobile experts would argue that update frequency is one of the critical metrics for an app’s success.

P2P Payment App Development Best Practices

I bet you feel like many details get left behind, like a list of specific technologies or advice on building an admin portal. The thing is, this stuff varies wildly from project to project. Along the same vein, I won’t pretend I know all the features your app should have. In fact, it’s something we collaborate on during the pre-flight workshop.

At the same time, we need to mention quite a few things to make sure you get the most of whatever team you work with. So, where should you direct your attention when you create an online payment app?

Security

For any software dealing with money, data protection is a crucial aspect. Users should feel safe and protected at all times, trusting your solution with their hard-earned money.

Frankly, it would take another blog to describe all the security facets you need to foresee in a p2p payment app. Let’s touch on the areas you absolutely can’t miss:

• employ machine learning and AI for automatic risk assessment
• use only trusted third-party SDKs/APIs and limit them to secondary features
• rely on strong data encryption for transferring money and financial data
• use on-device biometric authentication options for secure authentication

• enable two factor authentication with one time passwords (OTP)
• hide credit card details (like a card number, personal data, etc.)
• employ role-based access control for the admin web portal (unique IDs, OTP)
• keep an audit trail, logging all actions and transaction history on the platform
• implement session time limits
• monitor the internet connection and block the money transfer application if a user’s IP suddenly changes

As a matter of fact, it makes sense to maintain a standalone security center that monitors all activity in your p2p payment software — on the customer and business sides.

Open architecture

Remember that the more integration capabilities your software has, the quicker you’ll be able to respond to the market by integrating with new services.

That also works in the opposite direction. Suppose other companies can build add-on products connected to your p2p payment platform. In that case, you may soon discover yourself in a thriving ecosystem.

UX/UI flexibility

Personalization is still king when it comes to user interfaces. Customers love being able to adjust what they see on their screens. If you slap on that some AI, slightly augmenting their experience by surfacing the most frequently used options — you’re golden.

Voice and messaging interfaces

If you can wire, say, your utility payment right now with a simple voice command, consider yourself lucky. Even though voice interfaces are finding their place on more and more devices, many users still don’t have the p2p option to make and receive payments, or the experience is too puzzling.

Having a chatbot to help customers around your app is another good idea.

Also Read: How to Build a Messaging Application

Continuous improvement

If you include app analytics during the development step, you can catch invaluable data on app usage later on and use it for further product development. In-app analytics is also a great way to measure your app performance and monitor bugs.

Also read: Gamification in Banking: Process, Design, Best Practices

Cost of Developing a P2P Payment App

Please note that we do not do fixed-price projects. So please consider the price points here as high-level approximations. To keep it short, the approximate cost to build custom money transfer software is around $60K-80K for an MVP and $160K-$200K for a feature-rich p2p payment app.

Related: App Development Costs: How to budget for your application

Hopefully, you found answers to some of your questions about how to make a money transfer app in this blog. If you’d like to discuss your fintech idea and the mobile payment application development process in detail, please schedule a call with our experts.

[This blog was originally published in December 2021, and has been updated for more recent content]