Pandemic has brought about numerous changes in the economy, one of them being switching the attention of youth towards contactless payments and micro-financing.
With technology intervention in the sector in full swing, and open banking becoming mainstream, financial institutions are brainstorming on more such ideas that can help them channel the new customer base with brand new needs and expectations. A P2P payments app in that regard is gaining a lot of traction lately. In this article, we will have a look at how these peer-to-peer app development are helping Nonbank Financial Companies (NBFCs) in riding the disruption posed by the pandemic and technology advancement.
P2P Payment App – Introduction
A P2P app for payments provides users a medium to transfer money directly to the intended person through their linked banking accounts, win cashbacks on transactions, have access to quick micro loans with minimal collateral and much more. It doesn’t intervene in banking or credit card operations, rather, it employs APIs from the banking services company to offer a gamut of services they might get at the bank but without a bit of a hassle.
Benefits of P2P Payments App
- Quick and instant disbursal of micro loans – Automated credit score analysis through APIs has enabled NBFCs disburse quick and low-interest micro-loans for a short period of time, thereby appealing to consumers with minimal collateral.
- Automated KYC – With face recognition and two factor authentication etc. customer onboarding has become much easier, quicker, and secure.
- Expanded market base for cross selling – With a customer base depending on you for all their daily transactions, it is the perfect opportunity to expand into other service lines like investment schemes, insurance payments integration, etc. and use the platform to cross sell these services.
- Automated and personalized underwriting and risk process management – With technologies like Big Data, Machine Learning, IoT etc. it has become easy to monitor user activity and its financial footprints, such as credit histories, spending habits, social media posts, on the web to analyse their credit worthiness. This data can help NBFCs perform automated risk management and underwrite loans.
- Integration with all acceptable payment means – Given a broad range of payment choices people have, enterprises need versatile methods to accept all of them in order to fuel frequency of app usage. A P2P payments app can let you avail this option in a seamless way through cryptocurrency, wallet and UPI APIs.
- Better compliance, fraud detection and security – An app can offer compliance with the regulatory standards of PCI DSS. These standards for security are also embraced by major companies such as VISA, Mastercard, JCB, American Express, etc.
A P2P App must include following Features:
- Linking Bank Accounts
- Money Transfers
- Pay Bills
- Multi-factor authentication
- Recharge Accounts
- Foreign Exchange
- Lending System
- App Wallet
- Cross Border Transfer
Best Practices to Follow to Develop a P2P Payments App
- Target Local Market Initially
Starting with a regional market will enable you to roll out an MVP. This allows you to analyze the market response to your product/app. Going local also lets you off the hook of the global market competition from tech giants like PayPal.
- Security is paramount
Talking about consumer’s data, privacy and security becomes critical. Authentication technologies like biometrics recognition is one of the popular ways to shore up application security.
- Work with third party APIs
Pouring money into a novel endeavour that is uncertain of yielding results, isn’t always a very wise approach. Here is where third party APIs play a role. The third-party APIs aid in various tasks in the app development. For example, Dwolla API facilitates unification with the Banking System of the United States, whereas the Synapse API facilitates compliance and accounts security of the users.
- Channel a monetization model
Every app has one or the other monetization strategy that ensures steady returns on the investment and effort put in the app. There are two primary ways to monetize your app:
Premium mode can enable your users to use features like Cryptocurrency for payments, chatbots, currency exchange, texting, discounts, offers, etc.
Pay-per-Click involves generating an ad space for brands and advertisers. This technique remains a popular part of a company’s revenue generating strategy.
Given the technology radicalization and influx of customer expectations in the modern world, NBFCs have to embrace the fact that they hold better chances of survival, and growth through a collaborative strategic partnership with technology partners and service providers. These technology companies harbour agility and speed-to-market, which act as the driving force of growth for NBFCs. Therefore, before you begin, reach out to a financial software development services provider.