An Overview of How to Build a Blockchain Money Transfer Application
Blockchain money transfer app enables users to send and receive money directly without third parties. To facilitate peer-to-peer money transfers, let’s explore how you can build an application that runs on blockchain technology.
- What is Blockchain Technology?
- What are the Drawbacks of Traditional Money Transfer Applications?
- Third-Party Involvement
- Paying Cross-Border is a Lengthy Process
- Payment Processing Fee
- Why is Blockchain Money Transfer App a Promising Alternative to Traditional Apps?
- Getting Rid of Intermediaries
- Fast and Secure Cross-Border Payments
- Transparency and Security
- Automation With Smart Contracts
- How to Build a Blockchain Money Transfer App
- Choose Blockchain Money Transfer App Type
- Settle on the Mobile App Development Platform
- Define the Features For Your Application
- Emphasize the User-Friendly Design
- Take Security and Compliance Into Account
- Testing and Launch
- Final Take
- Frequently Asked Questions
Online payment is becoming more and more popular. Why do people like it so much? Besides being easy, it’s also fast.
Even though mobile payments are more convenient and faster, not everyone is taking advantage of them.
According to an eMarketer survey, only 43.2% of all smartphone users in the United States use mobile payment apps to transact online. According to this, there remains a vast number of people who are still reluctant to adopt the convenience of online payment apps.
What are the reasons why online payment apps aren’t used more frequently? The reasons for this can be attributed to a variety of factors, one of the foremost reasons being a lack of security and the number of parties involved in the payment transfer process.
Blockchain money transfer apps are born out of the current problems with traditional money transfer apps.
It is claimed that blockchain provides fast and secure transactions, but can it really deliver on that promise?
Here, you’ll learn what blockchain technology is and how it can be used to help the world of online payment apps overcome current challenges.
So, let’s get started.
What is Blockchain Technology?
Blockchain is referred to as a distributed database or ledger, which is a collection of data that is stored on a computer network and shared among the nodes.
As a decentralized and secure transaction record system, blockchains are crucial to cryptocurrencies like Bitcoin.
As a blockchain database is stored in blocks linked with one another (in a chain), data can be searched and retrieved.
As a secure digital ledger, a blockchain is immutable, which means that the information stored on it can never be altered, lost, or destroyed.
A blockchain ledger is immutable, making it a perfect solution for tracking orders, payments, accounts, and other activities requiring the highest security level.
Blockchain technology promotes consistency in the shared view of transactions by preventing unauthorized entries and creating built-in mechanisms to prevent these entries.
What are the Drawbacks of Traditional Money Transfer Applications?
When we think of the most popular mobile payment applications, Paypal, Venmo, Zelle, Apple Pay, and Google Pay are a few of the names that come to mind.
According to Statista, Paypal is one of the leading mobile payment applications. A deeper look at the user satisfaction score reveals that only 38% are satisfied with the service, while 10% aren’t. Among the people surveyed, 29% don’t want to use PayPal.
Image credit: Statista
There are multiple drawbacks associated with mobile payment applications, resulting in less adaptation of these applications. Here we have outlined a few of the most common drawbacks:
Trust is one of the biggest hindrances in the adoption of mobile payment apps.
Approximately 15,000 mobile users from 15 countries reported that they have a low level of trust in online merchants and payment systems. Also, they feel a lack of confidence while sharing too much of their personal information on the applications.
According to a news report by Trend Micro, learning mobile payment services provider Cash app was hacked by one of its former employees resulting in the compromise of the personal information of more than 8.2 million of its current and former customers.
As a result of such data breaches, a huge number of people set themselves apart from using online payment apps.
Another issue with online money transfer apps is the involvement of third-party apps. Usually, when you make a payment online, it will be processed instantly once you feed all the required information.
However, when you dig deeper into how payments are processed, you find the involvement of third parties such as payment gateways.
When the sender selects the payment method, all the information is transmitted in an encrypted format via the payment gateway to the payment processor. The payment processor communicates with the card issuer or bank account of the sender to get authorization for the sale, and then the payment is sent to the intended recipient.
The involvement of third parties also resulted in increased transaction fees which proved to be a negative factor in the acceptance of online payment services.
This is how online payment processing works.
Paying Cross-Border is a Lengthy Process
Nowadays, with the easy access that technology has made to everyday life, the world is more connected than ever before. It is common to make transactions between countries.
International payments are difficult to facilitate through today’s payment apps, and they often take two to seven days to complete. The cost of transfer is high due to the involvement of multiple parties.
Online Payment Processing Fee
This is yet another disadvantage of the conventional mode of payment applications. Every online transaction is subject to a processing fee that varies depending on the type of transaction.
Why is Blockchain Money Transfer App a Promising Alternative to Traditional Apps?
Blockchain technology is based on high ethical standards of security and is continuously on the verge of being adopted by the financial institution.
Blockchain technology can benefit online money transfer applications in a variety of ways. Here are a few of them:
Getting Rid of Intermediaries
One of the biggest advantages of blockchain technology is that it facilitates peer-to-peer money transfer eliminating the role of third-party intermediaries like payment gateway, exchange mode, issuer, and so on.
As the settlement of the funds takes place directly between the sender and receiver in real time, the process is easy and fast. Even though there are no intermediaries, blockchain technology still ensures the authenticity of the transaction. Moreover, the transactional information is recorded in a secure blockchain ledger which ensures the safety of the information.
Fast and Secure Cross-Border Payments
Blockchain technology has the potential to transform cross-border payments into a matter of seconds rather than days, as well as reduce transaction processing costs while ensuring end-to-end security and traceability.
Transparency and Security
A key strength of blockchain technology is its ability to provide a high level of transparency and security.
On the blockchain, all the transactions that occur are immutable and can be viewed by anyone with access to the blockchain. Furthermore, the payments can also be traced quite easily resulting in improved transparency.
Automation with Smart Contracts
The automation of processes with the use of smart contracts is a great advantage, especially for businesses and companies.
In a smart contract, blockchain developers have the ability to outline certain conditions that are specific to the organization concerned, depending on their requirements.
For example, an organization may hire a person on an ongoing basis to fulfill some monthly requirements as part of its ongoing operations. The person will automatically get paid when those monthly requirements are met.
This puts the organizations at great ease to complete the monthly recurring transactions in a timely efficient manner.
How to Build a Blockchain Money Transfer App?
Now as you have learned that blockchain money transfer apps can deliver a huge number of benefits. Below we have outlined a few of the steps involved in the development journey:
Choose Blockchain Money Transfer App Type
The first step is to identify the type of money transfer application you intend to develop. You can either opt to build an application for money transfer only or you can intend to develop an application that offers the entire banking services.
If you are planning to embark on a development journey, make sure you are thoroughly familiar with the requirements before proceeding.
Settle on the Mobile App Development Platform
As far as operating systems are concerned, Android and iOS are the two most popular options. Depending on the preference of your targeted audience, you can make the selection of the development platform.
Define the Features For Your Application
Having an understanding of your users and preferred platform, the next step is to choose the mobile app development platforms. You need to gain an understanding of the challenges they face and how you can solve them by creating features that address those challenges.
Emphasize the User-Friendly Design
User design is one of the most important factors to lure peer-to-peer money transfer applications. For a blockchain-based money transfer application to be successful, it has to be built in a user-friendly way so users can easily take advantage of the great features that the application has to offer.
Take Security and Compliance Into Account
There is also a concern about security that users have when they use an application. A user who encounters any issues related to the safety of your app might decide to switch to one of your competitors if they encounter any such issues.
It is therefore imperative that your blockchain payment application adheres to security regulations to ensure the safety of your users.
It is not just important to comply with security standards, but also to incorporate all the security features in order to ensure that your audience does not compromise your security in any way.
Testing and Launch
Critical phases in the development of a P2P payment app that is the testing and quality assurance phases. Testing makes sure that your application is free from all sorts of errors and bugs to ensure the smooth functioning of the application.
You will then need to publish your app in the relevant app stores after the testing has been completed.
Blockchain-based money transfer apps are establishing themselves as an efficient alternative to traditional day-to-day payment systems in the near future. You can create a similar application with the help of blockchain development companies.
These trustworthy companies with a highly experienced team of blockchain app developers that can take your project from a concept to a sure reality within no time.
Related Article: Best Programming Languages For Blockchain App Development
Frequently Asked Questions
How much do blockchain money transfer apps cost?
The cost of a blockchain money transfer app depends on the multiple factors mentioned below:
- App development platform
- The complexity of the money transfer app
- The complexity involved in the creation of the smart contracts
- The choice of the blockchain platform
- UI/UX design requirements
- Development scope
Based on these factors the cost of the money transfer app is determined.
How to choose the best blockchain development company?
The following attributes can help you make the selection of the right blockchain development company:
- Client testimonial
- Knowledge of different blockchain platforms
What are the top companies that are using blockchain for payment?
What are the top companies that are using blockchain for payment?
- IBM Blockchain
- ConsenSys Quorum
- Hydrogen Molecule
- Hyperledger Fabric