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How to make P2P payment service platform?


With the increase in the popularity of mobile banking and e-commerce apps, peer-to-peer payments have become an essential part of the technology landscape we are living in. Earlier, peer-to-peer payments meant writing a check or using the nearest ATM, but today P2P apps are bringing us closer to a “Cashless” Economy.

With the growing trend, we are evolving from person-to-market to person-to-person exchange. Paypal dominated the P2P payment segment from the last 10 years, but after a fresh boom in the FinTech sector, new companies are finally fighting for their market share. According to Business insider, the transactional value of peer-to-peer could reach $86 Billion in the next two year.

What is a P2P payment app?

The P2P platform acts as a middleman: P2P platforms will help you to transfer funds from your bank account to the bank account of another person using technological solutions.

Peer-to-peer apps are turning out to be very popular among the user base of 18 – 28, who are more tech-savvy than the other user base and are not afraid to share their personal bank account and transactional details with a third party app.

Peer-to-peer application market has not become mature yet, with multiple services competing for the same segment of the market.

The current market share of P2P payment apps is presented by two major groups:

1. Payment services/mobile apps which have been launched by Big companies (Google Wallet by Google, Paypal.me by PayPal, SquareCash by Square )

2. Payment services which are a part of a product startup or a separate payment service company. This category of Apps partner with Multinational Banks or integrate payments with a social network. (Circle, PopMoney, and ClearXchange).

They tend to start the services on their own, but eventually, end up joining bigger players in the form of acquisition or merger when they start making bigger profits or mature enough to handle all the transactions all by themselves. For example, Venmo which was acquired by Braintree in 2012, became a part of PayPal when PayPal bought Braintree a year later. This shows us that even a small startup will have enough room in the market share to compete with big players from the same segment. You don’t have to be worried about competition if you are a newbie who is just starting off with Peer-to-peer apps and is afraid of competing with financial giants.


Why are P2P Payments app essential?

P2P Payments apps and platforms have been gaining traction in the recent years. And not without good reason, there are so many things that these peer to peer payment platforms have been helping the end-user with. Otherwise mundane tasks such as splitting bills, paying rent with the roommate and many others have been made truly seamless and transparent, without much strain over the users. Another thing that the modern day peer to peer payments platforms do for us is to help keep track of our expenses, and hence save huge bucks for us over the perios of time.


Common characteristics of P2P payment services

The most important aspect of a P2P payment service is its personal use not commercial. They are made for people who want to send money to a person they already know as a friend or acquaintance. In some cases when you are sending money for a commercial use, P2P platforms offer buyer and seller protection guarantee for a better user experience. Like Paypal, some P2P service providers never do the transaction instantaneously, as to provide seller and buyer protection from fraud.

Every P2P payment system has their own requirement from their user base. Some want their user to connect to their bank accounts, Another one is satisfied with their Debit or credit card details. The last category of P2P app platform wants their user to put their money in a dedicated in-app account.

Peer-to-peer payment market is now ready for bigger growth, but how big this growth will depend on whether service providers сan overcome major obstacles on the market.


Obstacles in the Peer-to-Peer payment market

1. Popularity of outdated payment methods

Even though the transactions happening through cash or cheque are going down, but they have not completely stopped. Writing cheques for a big amount is still popular, but still, a big number of users are still using cheques for small transactions.

A number of P2P payment providers are leveraging users with a strong incentive program to shift them from outdated payment systems to their technological platform. But for that, they also need to win their trust with safety and reliability. That’s where we come to the second obstacle – safety requirements.

2. Safety concerns with third-party services and mobile apps

It has always been the biggest concern for the people who are willing to migrate from the outdated systems. Every P2P service provider addresses their user’s  concern in a different way.

For example, Snapchat claimed that the financial details they need for their embedded peer-to-peer payment will be stored by Square, who will encrypt it and send it to their servers.
Paypal is solving the trust issues by giving their customers a new service which is PayPal.Me.

3. Both the parties need to have an account

The P2P market has been very fragmented, and because of which it became inconvenient for people who are trying to use their system. If a set of users want to avail their service, both of them need to have an account with them in order to complete the transaction. Though not every payment service providers force their users to sign up – Square Сash, for example, allows its user’s to send money to people who are not using their service, which makes it easier for them to compete with other peer-to-peer payment systems.

Even though the transaction is happening, but it is not real time. It takes a couple of days to pass all the checks and reaches the account of a user after that. This is a problem which has not yet been solved.

Also Read: OnDemand laundry app development.


PCI DSS Compliance for P2P Payment apps.

Any entity involved with payments and banking solutions are bound to comply with regulations of PCI DSS. So when you set out to create a peer to peer payments app, make sure that you are fully compliant with PCI DSS. By making sure that you are PCI DSS compliant, your payments app for peer to peer network serves as a part of the solution to payment services and card data compromise. While securing your own network at the same time. The first step is to create and maintain a secure system and network. Following this, a management system is needed to be put in place. Also, strong access control standards are needed to be met for these systems. The networks must be completely vetted at regular intervals and the user information must be safeguarded to top-notch quality.


What’s to expect from P2P payment applications future?

At SODIO, we have helped multiple FinTech companies with their P2P demands and have researched extensively on this sector. With our understanding, we excluded that Peer-to-peer payment market is expected to grow and become even more competitive over the next couple of years.

Even the structure of the market is also likely to change, as messengers and built-in payment services started to gain traction within the last three to four years. It will not be unrealistic to expect that soon we will see a P2P market with only several big players that are represented by full-stack applications and multiple chatbots and microservices that are popular regionally but not known across the board. This promises enough room for small startups to grow and develop their peer-to-peer payment solutions complementing the market rather than disrupting it.


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