Peer-to-Peer Mobile Payment System: Development with Blockchain

The advent of peer-to-peer mobile payment apps has created a new world of cashless, card-free, and pay-contactless transactions. Their cross-industry applications and use cases range from splitting bills, making remittances, and booking tickets to managing daily expenditures.

Financial applications are set to transform the way we make online payments with the availability of digital wallets, cryptocurrencies, m-commerce apps, and peer-to-peer payment apps. Several next-gen peer-to-peer mobile payment apps now support card-less, cash-less, and in some cases, bank-less transactions.

So let’s have a look around at mobile peer-to-peer payments systems that are proving to be a revolution on a global scale.

At its core, a peer-to-peer (person-to-person) payment app is a mobile application that enables users to perform electronic money transfers. P2P mobile payment apps have a range of use cases that include:

• Making payment to merchant/landlord in the installment basis
• Making payment to cab services, including discount calculation
• Paying a merchant/landlord in installments
• Making a friend-to-friend borrowing request
• Splitting dinner bills with friends
• Making remittances to people living in other countries
• Making payments for utilities, internet, and other services

P2P payments are not only limited to geographical locations, i.e users can also perform cross-border transactions.

Person to person foreign currency exchange applications aim to bring users together worldwide. They eliminate intermediaries, such as banks, and brokers, which results in up to 90 percent cost savings on international exchange and transfer fees.

P2P lending platforms enable users to avail repayable microloans at lower interest rates than banks. These platforms are more beneficial for investors looking to monetize their funds in fragments.

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They offer cheaper transaction provisions as compared to their traditional counterparts. Now, technologies like smart contacts make possible to make secure payments via a smartphone app.

Peer to peer mobile payment solutions vary as per the requirement of the work areas, such as airtime transfers, travel and ticketing, and merchandise and coupons. Their industry applications include fields like retail, travel and tourism, hospitality, logistics, energy, utilities, etc.

Companies looking to develop a mobile-based peer-to-peer money transfer system can consider developing one of the four types of its business applications.

Several banks consider deploying mobile payment application to customers. It ensures that merchants have the necessary PoS (Point-of-Sale) acceptance provision.

These applications provide online P2P/C2B payments with or without checking accounts and debit/credit cards. Generally, these apps come with an integrated wallet.

Social media payment solutions enable users to make frequent payments to people they regularly connect with. It is the reason that several payment applications are integrated with messaging apps.

These applications enable money transfers within their product network or ecosystem. In such a payment application, ‘Payment’ is generally a default device-feature than a standalone app.

Now, it might look complex to develop a peer-to-peer payment app, with so many peculiarities and big players already dominating the market.

However, we have made it simpler with the following steps that you need to consider before developing a p2p payment app.

Technological advancements lay the foundation for developing new, innovative business models. They provide efficient solutions for value-adding to consumers and making businesses more self-reliant.

Then, we should consider the following emerging industry-transforming technological advancements.

Real-time transactions or payments (RTM technology) enable the existing payment solutions to achieve faster transaction speed. Also, they provide essential messaging capabilities and immediate update of transaction status.

DLT based technology like blockchain and smart contracts facilitate solutions that provide enhanced security and cost-efficiency.

Migration from legacy and pricey systems to single blockchain based platform can provide more affordable payment solutions.

So now let’s explore one use case based on the aforementioned factors in the payment p2p app development.

According to the MIT Technology Review, Airfox is a highly acclaimed startup amongst revolutionary financial solutions. Airfox aims to develop a new system that serves people having limited access to banking with reliable, egalitarian, and democratic access to financial services. It is a revolutionary peer-to-peer microloan lending and disbursal system that uses ERC-20 tokens issued on the Ethereum blockchain.

The app facilitates users to make peer-to-peer payments and avail loans. For instance, a user initially deposits its Airfox integrated wallet and conduct payments through the app. Further, the application improves the credit score based on certain predefined parameters, which makes a user eligible for more efficient loans.

• Mobile: Users get a complete mobile payment experience
• Machine learning: Gathers data from users’ smartphones to generate a credit score
• Blockchain: All transactions pass through blockchain, and also stored in its database

The company aims to create its all financial instruments using blockchain to have anyone worldwide finance their users.

When it comes to developing a payment system, security and standardization are the paramount factors. Additionally, preventing fraud and other issues is another way to ensure long-term success.

A decentralized peer-to-peer system must have a strategy in place to set up resource allocation and protection requirements. Particularly, they need to prevent two types of attacks: DoS and storage flooding.

As the fintech market is growing, it also needs to fulfill regulatory demands while also adhering to complex laws.

A focus should always be on how to deliver from quality UX to features that can stand the test of time, instead of experimenting with functionality.

• Unique ID/OTP
• User digital wallet
• Notifications
• Send/request money
• Send a bill/Generate an invoice
• Transaction history
• Transfer amount to the bank account

P2P networks are more affordable, easy to maintain, quick and reliant than centralized systems. However, one thing that hampers their widespread adoption is security, At the same time, it is of paramount importance in online payments. Both data transmission and storage always remain at high risks. It is where blockchain technology comes into play and enables blockchain application developers to deliver the benefits of peer-to-peer networks.

For instance, a blockchain based payment system can use the Rich Communication Services protocol (RCS) to replace SMSs with the text-messages system that provides phonebook polling and in-call multimedia transmission. A similar protocol has already been tested by a Japanese company SoftBank for P2P transactions between mobile users.

Blockchain application technologies that can be used to further enhance the development of a p2p payment system

• NEM (New Economic Markets)
• Stellar
• Ripple
• Smart Contracts
• Hyperledger

Entering the market of fintech development is challenging, but at the same time, it can be a game-changer. We have the requisite expertise in providing efficient fintech application development services with blockchain technologies. If you re looking to enter the development space of Fintech market, connect with our blockchain specialists today!