A cashless economy is the reality of the future. This reality is definitely possible with mobile payment apps. Mobile users prefer using payment apps to send as well as receive money. Today, most of the payment services are available on the modern-day payment apps. One can simply pay to a merchant or transfer money to their friends & relatives, through the mobile payment apps, without even going to a bank. These peer to peer payment apps is gradually causing a massive change in the way, we do financial transactions.
What is a peer-to-peer payment app, anyway?
A peer to peer payment app could be described as the next level of traditional money transfer, where the money transfer is executed electronically. So, that means instead of doing a counter transfer, where one has to visit the counter physically, one can simply do an electronic money transfer by sitting at home.
The P2P (Peer to Peer) payment app acts as a gateway between these parties. Right from paying the bill for dinner to paying monthly rent, everything can be settled through P2P payment apps. However, banks may have transaction limits, and these apps have to abide by the banking rules. Some of the common characteristics found in the P2P payment apps are:
P2P payments apps are specifically designed for individual personal transactions, where the transacting parties might already know each other. Hence, it is expected that the level of transaction protection will be much lower than conventional mobile apps or other types of commercial payment apps.
The timeline for the completion of a transaction can range from few seconds to a few days. However, the P2P apps cannot be blamed for this, as they act only as a mere gateway, while the transaction completion time is entirely dependent on the transfer method selected by the user, or as on some occasions the transaction methods that are provided by the bank to the users.
The transaction on the P2P apps can be done through different fund sources. This includes banks account, debit, credit or prepaid cards and mobile wallets.
What can a person-to-person payment app do?
Peer to peer or person to person app can be used for a host of utilities, and virtually it is a platform with endless possibilities. In today’s mobile-centric world, peer to peer payment apps plays an important role. Some of the utilities for which it can be used are listed below:
Paying rent to the landlord.
Paying for online shopping.
Borrowing money online.
Paying installments to the vendor.
Paying utility bills (Insurance, Taxes, Electricity, Water, Grocery, etc.)
Paying equated monthly installment (Where installment needs to be paid manually).
Paying for cab service.
Splitting bills amongst friends.
Sending & receiving money from friends as well as relatives.
Remitting money to different countries.
Setting the fund limit and reminders for timely payments.
Business models of P2P payment applications
As a mobile app developer, if you are planning to build payment app then you have to understand the business models of the P2P payment applications. There are four business models, that are described below:
Bank-Centric Model:
In this mode, the payment apps are predominantly centered around bank transfers. The apps in this category have their own digital payments networks, which is used by the participating banks for electronic fund transfer. Users who register with these apps can transfer money to any bank account that belongs to the participating banks. These apps have a higher level of transaction security. Some examples in this category will be Dwolla, Zelle, and PopMoney.
Standalone Financial Services:
Apps in this category enables to transfer from one app to another, with the help of digital wallet. The digital wallet can be funded with the help of a debit card or a local bank account, while the accumulated fund in the digital wallet can be transferred to a debit card or local bank account. The fund transfer is instant as well as faster in this case since the money is transferred to digital wallet instead of a bank account. However, transaction security is lower. Some examples in this category are M-Pesa, Venmo, and Square Cash.
Social/Messenger/ Web Platforms:
In this category, the apps that are primarily used for social media or messaging, are additionally used for sending or transferring funds. Some common examples are a Facebook Messenger, WhatsApp messenger, SnapChat, etc. The user needs to update his debit card or credit card as a payment source, underpayment settings before they start transacting. The transaction security depends on the security of the messaging platform or the web platform.
Mobile OS/device manufacturers payment apps:
In this category we have payment apps, which have been developed by Device manufactured or platform developer. Some good examples would include, Apple Pay, Android Pay, and Samsung Pay. One can simply add their card details and start transacting. The best part is, they can perform in-app purchases from app stores seamlessly. Both, Samsung Pay and Apple Pay, are considered as one of the trusted and safest payment apps.
How to start creating your own peer to peer payment app
If you are willing to create payment app, there are certain recommendations which will help you to get started based on the business models and success stories of Square Cash and other similar P2P applications:
Always refine as well as define the market for the app. Using the MVP approach, it is recommended to start with a smaller regional market. In this way, you can determine your app’s performance, as well as avoid competing with biggies like PayPal. Moreover, you can coordinate with the regional banks, and provide them customized P2P platforms.
Since payment apps will deal with financial transactions, transaction security is extremely important. This would mean securing financial details as well as personal details, without any form of probable breach. One best solution will be to get certified as per the requirements of the payment card industry. This would definitely make users feel much more secured, while they are using the app for performing any kind of transactions.
It is not recommended to invest a lot into the app at the beginning since you don’t whether it will be a success or not. As a best practice always integrate your App with third the party apps and services, wherever there is a scope. This would definitely help to keep the costs in control initially. For example, you can integrate your app with the Synapse Pay API, that is used for creating secure accounts.
Develop a proper monetization model for your app, especially if you are building a standalone app. This would include in-app Ads, subscription models, and value-added services. Without a monetization model or plan, an app might find it difficult to survive.
No matter how good your App is, it will succeed only if the user is able to receive the perceived value. This is possible by developing a better as well as hassle-free UX, with a logical process flow that would add user convenience. The app should be able to drive user engagement while retaining the user in a longer run.
Customer retention is key for the success of your payment app in a longer run. The best way to retain customers is by providing proper support. This includes multichannel support that includes, phone, chat, and email. Customers often get worried when the transaction doesn’t go through, wondering what happened to their money.
