A peer-to-peer payment, otherwise known as a P2P payment, allows individuals to send money to friends, family, or other individuals without so much as lifting a finger. Within the United States, sending money to another individual (rather than a major organization or business) can be extremely difficult. The only way to do it electronically is through a peer-to-peer money transfer API or payment app.
Some examples of these P2P payment service providers include Paypal and Venmo. Banks offer them too. So how do they work and what are the benefits of P2P money transfers and peer payment app APIs?
It’s all here in Sila’s guide to P2P money transfer APIs.
How Peer-to-peer Money Transfer APIs Work
Peer-to-peer money transfer APIs are just like payment APIs except that they allow individuals, rather than businesses, to send money to peers, friends, or family. This means that anyone who also has access to that API can receive or send money through it.
Common P2P payment apps include Venmo, Cash App, Sila, and Paypal. With services like Cash App and Venmo, the money is instantly available. Sometimes a Paypal transaction might be held, for example, but for the most part, the transferred money is available immediately.
P2P payment APIs work by collecting personal banking data from each individual and sending that information to the receiving individual. This process then verifies that the individual making the request is the owner of the bank account; this is known as Know Your Customer (KYC). A banking API will want to know the consumer information, the bank account details, the amount of money being transferred, and other transactions.
When using a P2P API, the API will likely remember the user so that the customer does not have to share their information or banking details more than once. The API will collect information about the bank account as well, verifying the bank account with the financial institution as valid.
Benefits of Peer-to-peer Money Transfer APIs
Peer-to-peer money transfer APIs are like open banking APIs. APIs, or application programming interfaces, operate through endpoint-to-endpoint communication. APIs require a private API key in order to access. Once personal data is sent through the API, only the receiving endpoint can access the data.
APIs are extremely secure, which is just one of the reasons why they are useful for sending sensitive banking information. Additionally, APIs that use certain security features make the API transaction even more secure. For example, a payment API like Sila allows users to securely link their bank account, load up a balance, perform identity verification, and send money. The API outsources these services so that the data is never stored within the Sila app, making the information virtually hack-proof.
A P2P payment API is convenient, cheap to use, easy to use, and often sends money quickly to the recipient. These are some of the many reasons for using a P2P money transfer API. Other reasons include the ability to send cross border payments, send cryptocurrency, act as a digital wallet, and even enable smart contracts.
Most importantly, a P2P payment app supports open banking and mobile banking, which broadens financial possibilities in the U.S. and globally. By enabling more options for mobile payment methods, you can create abundance where there is scarcity. No longer are individuals forced to pay using clunky payment types, like cash, check, wire transfer, or credit card. Instead, with a P2P app, or a P2P API that is integrated with common operating systems, more people have options and access to digital banking!
Best Practices for Peer-to-peer Money Transfer APIs
P2P transfer APIs require the same verification processes as standard banking transactions. Therefore, a company that utilizes a P2P funds transfer API should follow standard banking API best practices. This includes:
Secure bank account linking
Know your customer (KYC) and identify verification
Secure storage of personal data through PCI-SSD hardware
Cybersecurity and security measures
Standard security best practices for using an API, including encryption, authentication, OAuth/Open ID, system protection like throttling and quotas, and much more!
If using a banking API like Sila, you will be building the API with the documentation provided. This documentation has been verified as accurate, but developers need to sandbox or test the API to ensure that it operates for the needs of the user.
P2P payment APIs can not only send money, but they can also be developed to pay bills, request money, store cash, and convert digital currency into cash. It is typically a mobile app, so developers will need to ensure that the API can be securely accessed through an easy-to-navigate user interface.
If designing a P2P payment API and you want to enable a cash fund or mobile bank account, then you’ll also need to create a mobile money API so that the API can interact with ‘cash’ and be able to send it through a real bank account. Mobile money allows individuals to send a mobile payment while not needing to access their own personal bank account, and instead access the funds within the P2P app.
Best Peer-to-peer Money Transfer APIs
When considering P2P transfer APIs, you’ll need to identify the way the app will be implemented and its uses. If you want to develop a P2P transfer API, then consider tapping into the Sila documentation in order to set one up. When creating your own payment API, you regain the power to control how the API can be used and the ways the API can be integrated into the financial payment systems.
Common P2P money transfer APIs include Venmo and Cash App. But, consider what developing your own payment API can do! Allow individuals to send money through more common services and services that are available outside of the U.S. (which Venmo and Cash App are not). And, with a world-wide API, then that means that individuals will save on currency conversion rates and transaction fees.
See today why Sila is the best new potential P2P transfer API. Create your own or implement it into your business production. With a smart money transfer API, you’ll stay on top of these payment trends and be a part of the open banking revolution! By creating a P2P API, you can take back control of international and U.S. money transfers.