If it’s about payment and an online transaction/mobile app, it’s fintech. Fintech is a very lucrative industry and many fintech startups are hoping and trying to make capital of the changing financial landscape. 

You might have gotten an idea from the blog topic that we are talking about mobile payment app development. 

Just imagine in today’s time you need to pay a handyman to repair a box, but you don’t have enough cash and you are going to an ATM, to make money, you gave money to the handyman but he doesn’t have the change so you are something else to round off the amount, how irksome that sound, right.  

Now, if you are someone who wants to make your and others’ life easier then one good option is improving people’s payment experience by developing a P2P mobile payment application. In the past few years, cashless payment has been normalized and people are loving using apps for making payments. However, still, not everyone is comfortable using apps to make payments. 

But there are also some complications in the finance world that can get annoying sometimes, and if you have to face them on a daily basis for some monotonous reasons, then it will become a nuisance. 

Still, developing a P2P app is not easy as you will have to conquer many technical, legal, and security hurdles around the payment process. That is why you have searched for this and landed on this blog. 

In this blog, we will explain the hurdles and the approach towards building a secure mobile payment app. 

Let’s get started!

What Do You Understand by a P2P Payment App?  

P2P stands for Peer-to-peer, it is a payment app or a digital platform that allows the end-users to send money to peers or retailers. A P2P app offers the freedom of instantaneously transferring money between both parties without involving any intermediaries. 

As I said, cashless banking has been a hit since the pandemic. People are now selecting a more hygienic option that doesn’t involve physical cash. The payment apps allow them to load an e-Wallet with money from their bank account, thus enabling cashless transfer to the second party. 

There are many popular money transfer and payment apps.  Still, it’s a fintech revolution and new competitors enter daily in the market with distinct and unique features. 

Some of the popular payment and transaction apps are- PayPal, Zelle, CashApp, ApplyPay, and GooglePay. 

Some Quick Stats on P2P 

  • It is estimated that more than 5 million users will be transacting with digital payment apps in 2026. 
  • Around 29% of the US population prefers to pay with a mobile payment app. 
  • 42% of the US citizens transfer money to their friends through payment applications.
  • 90% of the US mobile wallet market share is of ApplePay.
  • 30% of the total transactions are made with digital wallets. 
  • It is still a vast untapped market for digital financial products, as 31% of adults have yet to own an account. 

How does the Payment Application work?   

Despite how easy a mobile payment app makes the entire payment process, its inner workings are complicated. Different payment apps have different features, they might use different authentication methods, security processes, and payment gateways, but they all share a common principle. 

Almost all P2P payment apps encompass a digital wallet, where you can deposit funds from credit cards or bank accounts. 

There are two options in P2P transactions:

  • First, both parties must install the same payment app on their devices.  When you transfer a payment to your friend, you will have to enter a piece of personable information, like an email or mobile number. The amount needed to be sent will be deducted from your e-wallet and will be credited to the receiver’s payment app. 
  • Second, only the sender is having the payment app. The sender will enter the receiver’s credentials in the app. The recipient will receive a link and can pass through the flow just on a web page. 

However, in the case of an in-store purchase, there is a different transfer mechanism smoothing payment to retailers, i.e., NFC and QR code.

NFC (Near-field Communication) inholds transferring payment details with short-range radio frequency to a payment terminal. Moreover, a QR code contains a unique ID that recognizes a specific party in the transaction. 

NFC is the primary payment model in the US and other western countries. Payment apps like Apple Pay, Samsung Pay, and Google Pay uses the NFC model in smartphones to facilitate payment in the merchant payment terminal. Moreover, the QR code is more prevalent in the Asia-Pacific region, where Chinese-based Alipay is leading the pack.  

Regardless of any payment technologies, the payment transfer includes sending encrypted information to the processor, banks, and credit card users. This is done through a highly-secure channel between the parties so that the transaction integrity is not being compromised. 

Types of Mobile Payment Apps

Mobile Payment Service

Before you move forward with mobile payment app development, it’s important to understand the types of mobile payment apps and the types of markets they serve. 

The common types of peer-2-peer payment apps are:

1. Standalone Payment App (Example- PayPal, Venmo, Square Cash, and AliPay)   

2. Bank-centric Payment App (Example- Dwolla, ClearXchange, and Zelle)

3. Social Media-based Payment Services (Example- FacebookPay, WeChat)

4. Mobile OS Payment Services (Example- ApplePay, SamsungPay, AmazonPay)

5. Foreign Exchange Payment App (Example- Wise, CashApp)

6. UPI Payment Service (Example- PhonePe, Paytm, GooglePay, SBIPay, and BHIM)

1. Standalone Payment App

The standalone payment apps are a self-encapsulated ecosystem that set the users free from the entire banking infrastructure. 

In this model, the user deposits money from their account to the app’s e-wallet, and they’re free to transfer the money to another user who uses the same app. PayPal, Venmo, and AliPay are some major apps that utilize the standalone model.  

2. Bank-Centric Payment App

Banks have shown immense interest in the P2P app segment, and few payment apps there are built with the existing banking infrastructure such as Zelle. It is a popular P2P app that links with many US banks, allowing users to make a cashless purchase with retailers.  

3. Social Media-based Payment Services

Social media platforms are assessing the viability of advancing a P2P payment app and is wishing to replicate the success of WeChat. FacebookPay is available in the US, where the user can send payments to their contacts without leaving the app. WhatsApp has also opened a payment service in India, where users can send and receive money through UPI ID or a QR code. 

4. Mobile OS Payment Services

Some major players in the mobile industry have built their own P2P digital payment ecosystems. ApplePay and SamsungPay target the users of their devices with a payment service based on intrinsic hardware capabilities like NFC. 

5. Foreign Exchange Payment App

A foreign exchange payment app allows users to transfer or exchange money with their peers living in different countries. Wise is a popular foreign exchange payment app that is used by approximately 25 different businesses, owing to its lower exchange fees when compared to other banks.  

6.  UPI Payment Services 

UPI, or Unified Payment Interface, is a system that integrates multiple bank accounts into a single mobile application. It is an instant, real-time payment system developed by the payment corporation of India. This interface facilitates interbank, peer-to-peer, and person-to-merchant transactions. Some of the leading UPI payment services are PhonePe, BHIM, SBIPay, and Paytm. 

Must-Have Features For Payment App

Mobile Payment Service

There are some features that are most needed in a mobile payment app as they will serve the users adequately. The must-have features for a payment app are:

Send and Receive Money

The end-user will have the freedom to transfer a certain amount of money in their e-wallet to the intended recipient. And they can receive money from other users. 

Spending Analysis

It is a feature that allows users to review their expenses over a specific period so that they can plan for future spending. The payment apps will compromise Saving Goals and Cashback, which are helpful to encourage meaningful expenditure.  


The mobile app will send notifications for all financial transactions, account activities, and other events of interest. 


It is a value-added feature that will allow the user to pay bills from an external service provider or will send invoices to the user to initiate payment collection. 

Transaction History

The mobile payment app should contain immutable records of all past transactions and should be available with filters to allow the users to select specific transactions and periods. 


There should be multi-factor authentication. OTP, PIN, and biometric validation will prevent the payment app from being abused by unauthorized parties. These are the security tokens that ensure the users do not accidentally initiate any fund transfers. 

Money Transfer

One can perform money transfers locally or in foreign currencies through various payment gateways, banks, and service providers. 

Banking Integration

Other than peer-to-peer money transfers, one can also conveniently transfer funds to their bank account.  

Text Messaging   

A messaging feature in a P2P app should be very interactive, as it is helpful to connect with fellow users. 

Customer Support

Customer support must be provided with an AI-based chatbot, and a knowledge base helps guide users to solutions when they face technical, transactional, and other problems. 

Steps to Build a Payment App

You can develop a successful payment app if you know what to do and what the steps are to build one. Here are 6 steps to build a payment app:

Mobile Payment Service

1.  Conduct Research and Analyze the Market

To start with, you have to have a clear perspective on the types of problems you are trying to solve and make sure your product has demand in the market. All this can be determined by thoroughly studying the digital payment market. Analyze your competitors, what they are doing, how they are doing it, and what they are not doing. 

This is critical in order to remain highly competitive in the industry. You have to do deep market research because payment apps depend on robust security, technological integration, and regulatory compliance.  

2. Select a P2P App Type

After conducting research, you must decide on the type of P2P app in which you wish to launch your app. Your P2P app should be chosen based on the business value, goals, and solutions. For example, some are not interested in building a similar app like PayPal or AliPay because those are major applications in the standalone app segment. However, many are attracted to the potential of P2P lending in the near future. 

3. Study Your Targetted Audience

It’s possible that you have a revolutionary idea in the entire fintech space, an idea that no one has ever thought of. But the real test of your idea will be when it is introduced to the public. It doesn’t matter how revolutionary your idea is unless the audience agrees with your thoughts. Thus, it’s important to study your targeted audience, as getting to know your audience will reduce the risks associated with launching a new app.  

By interacting with users, you can clearly understand the main pain points and can overlook opportunities that will help you build the application that a user wants. 

4. Make the Design of Your App

Once other information is clear, you can move on to the design phase to structure the feasibility findings into mind maps that explain the overall picture of the app. Based on the design, the developers will work on the app and align the UX and UI throughout the process as per the business goal. 

The design will depict the layout of the app screen and will enhance user interaction with many elements of the app. You will get a visually-appealing screen layout and a well-planned illustrative user journey that will help the users achieve their goals effectively. 

5. Build the Minimum Viable Product (MVP)

It will be wiser to test the application in the market with an MVP rather than directly launching a full-blown feature-laden app. At this stage, the developers are entangled in coding, technology integrations, and testing to produce a functional app for users. 

Building a payment app demands expertise in API integration in order to link the app with different cloud services. Blockchain and AI are now common in fintech and act as the base of the payment mechanism. 

Don’t forget to include users in testing the MVP as their feedback will be valuable in making sure that the app is being developed directly. 

6. Launch the App 

The last step will be to launch your app, but this is not where you have to stop. After launching your app, you have to be watchful for any potential issues. Keep an eye on all the feedback and analytics to recognize the bugs and rush to fix them. 

It is necessary to constantly improve the app in response to changing trends. the app is constantly based on some changing trends. 

How Extern Labs Can Help You Build a Payment App

Extern Labs is a leading mobile app and software development company with broad experience in developing payment and fintech apps. Our software team consists of skilled experts that are fluent in fintech technologies. 

We hold expertise in blockchain, smart contracts, AI, and some critical technical skills that are needed for the growing fintech market. We not only focus on building innovative cutting-edge solutions, but we also take into consideration the feasibility study and the usability test to leverage the feedback on the apps and to engage with users’ demands. 

In addition to this, we are conscious of the deadlines, budget, and business goals of a client. 

To be more precise, Extern Labs innovates IT solutions, converges technologies, and offers valuable opinions to develop successful P2P payment apps. 

I have tried to mention every detail that you should be aware of while building a P2P payment app. Developing a successful digital payment and generating revenue out of it requires a considerable amount of constant effort, but a well-experienced development partner will surely smoothen your journey. 

Fintech is a fast-growing industry, and you should not miss any opportunity to take advantage of it. We are experienced in this niche and have served our clients in the best way possible, so we are confident that we can do the same for you as well. 

Visit our website, take a peek at our case studies, and contact us to get your journey started. 

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