How to Develop an App Like PhonePe

The digital wallet market has grown from $450 billion to $750 billion worldwide. You're targeting an industry with incredible momentum if you want to develop an app like PhonePe.

PhonePe achieved a remarkable 857.22% growth in 2019, surpassing both PayTm and Google Pay. The Indian digital wallet market will reach $81.65 billion by 2025 with a 30.3% annual growth rate. This space presents massive opportunities as PhonePe now controls over 50% of the UPI transaction volume.

A successful app like PhonePe needs careful planning, technical expertise, and market insight. Your UPI-based payment solution must align with the ecosystem, compliance requirements, and user expectations. The development costs range between $30,000 to $50,000 to build an app like PhonePe.

This piece guides you through each stage of developing your own UPI payment application. You'll learn what makes users love an app like PhonePe as we explore the UPI framework, launch strategies, and implementation techniques. Let's start this exciting experience!

strategies, and implementation techniques. Let's start this exciting experience!

Understand the UPI Ecosystem

The success of payment apps like PhonePe depends on how well you learn about UPI, the financial framework that enables millions of daily transactions across India. You need to understand this ecosystem before developing a PhonePe-like app.

What is UPI and how it works

UPI (Unified Payments Interface) changed India's financial world when the National Payments Corporation of India (NPCI) launched it in January 2016. This real-time payment system lets users transfer money between bank accounts instantly through smartphones. Traditional banking barriers no longer exist.

UPI works as a unified layer that connects banks, merchants, and individuals through a simple mobile interface. The system handles over 10.55 billion transactions monthly. It has changed how people manage their money.

The UPI mechanism works this way:

1. Download & Register: Users download a UPI-enabled app (like PhonePe) and link their bank accounts
2. Create VPA: They create a Virtual Payment Address (username@bankname format) as their digital identity
3. Initiate Transactions: Users can pay by scanning QR codes, entering UPI IDs, or using registered mobile numbers
4. Authenticate: Each transaction needs PIN verification for security
5. Instant Settlement: Money moves in real-time between accounts 24/7, including weekends and holidays

NPCI guidelines and compliance essentials

Building a UPI app requires strict adherence to regulations. NPCI has released complete guidelines through over 300 circulars between 2016-2025. Major updates will come in May 2025.

CERT-IN empaneled auditors must conduct security audits for all UPI entities before onboarding and yearly after that. Companies that don't comply may face penalties, API restrictions, or a ban on new user registration.

Key compliance areas include:

• Information Security Framework: Covers the entire UPI infrastructure including frontend and backend systems
• API Rate Limiting: Limits on balance checks (50 per day), linked account views (25 daily), and transaction status checks (3 per transaction)
• Data Protection: Following Personal Data Protection Bill and other privacy regulations
• Transaction Parameters: Meeting RBI guidelines on limits, authentication methods, and settlement processes
• Technical Standards: Following interoperability and security requirements set by NPCI

UPI fraud cases rose by 85% between 2023-2024, reaching 13.42 lakh cases with fraud value doubling to INR 1,087 crore. This shows why compliance isn't just about following rules, it protects users.

Why UPI is the backbone of apps like PhonePe

UPI drives India's digital payment revolution and handled 49% of global real-time payment transactions in 2023. This makes it perfect for building apps like PhonePe.

The system's open architecture links 652 banks and over 80 apps. It creates an ecosystem where users can pay each other whatever app they use. New payment apps get immediate market access through this smooth connectivity.

UPI works well for payment applications for several reasons:

The zero-fee structure (through government-backed MDR policy) brings in users and merchants. PIN-based security with two-factor authentication builds trust without exposing account details. The system runs 24/7 to meet modern consumer needs for instant services.

PhonePe, Paytm, and Google Pay changed digital payments by building on UPI's features. They added accessible interfaces, rewards programs, and extra services that users need.

Developers who want to create an app like PhonePe can use UPI's ready infrastructure. It solves basic digital payment challenges while letting them focus on building unique features and experiences.

Build a Solid Payment Infrastructure

Establish a robust foundation by mastering the core components of the UPI framework, ensuring seamless bank-to-bank transactions.

Consult Our Experts

Conduct Market and Competitor Research

Payment apps don't just appear out of nowhere. You need to take a closer look at market realities before writing any code to build an app like PhonePe.

Identify your target audience

India's digital payment market serves different user segments with unique needs. Recent studies show three main user groups worth targeting:

Urban consumers are leading UPI adoption, especially when you have dual-income households looking for convenient payment solutions. These users make about 15-20 transactions every month across various categories.

Small merchants are growing faster as a segment, with over 37 million vendors now accepting PhonePe payments. They care most about quick transactions and reliable settlements.

On top of that, tier-2 and tier-3 cities show huge growth potential. PhonePe's expansion into these areas has helped it stay dominant. This suggests a chance for new players to target these underserved markets.

Analyze PhonePe, Paytm, and Google Pay

Three major players dominate the UPI landscape, each with its own strengths:

PhonePe leads with approximately 48% market share in transaction volume and nearly 51% in transaction value as of February 2024. Its soaring win comes from:

• Early market entry (just months after UPI launch)
• Strong user base of 500 million registered users
• Wide merchant network covering 99% of India's PIN codes
• Detailed financial services ecosystem

Google Pay holds second place with 37% market share in volume and 35% in value. It keeps competitive transaction volumes despite fewer registered users (67 million compared to PhonePe's 500 million) thanks to:

• Cleaner, ad-free user interface rated best for user experience
• High trust among urban professionals
• Easy payment experience
• Fun rewards through scratch cards and stamps

Paytm sits in third place with about 10% market share in volume and 8% in value, offering:

• All-in-one financial services approach
• Built-in wallet functionality
• Wide service ecosystem including movie bookings and travel
• Strong online shopping integrations

These three apps handle 95% of all UPI transactions, making it a highly concentrated market.

Spot gaps and chances in the market

Market concentration brings challenges and opportunities. The National Payments Corporation of India wants to cap individual UPI app market share at 30%, creating room for new players. This regulatory push aims to:

• Lower systemic dependency risk
• Boost competition
• Vary transaction routing

New developers looking to create an app like PhonePe can tap into several untapped areas:

Regional customization comes first. Apps that support more regional languages do better than their rivals. PhonePe and Paytm support 11 Indian languages while Google Pay offers seven.

Infrastructure reliability is the next pain point. Users face transaction failures often, especially with Google Pay. This shows room for apps with more reliable systems.

Special features for specific market segments could set your app apart. Research shows merchants value:

• Feature-rich dashboards
• Offline capability
• Quick dispute resolution
• International payment options

A 2024 survey of frequent UPI users points to other areas for improvement: better security features, clearer reward systems, and smoother integration with business accounting systems.

Define Core Features for Your UPI App

Building a successful UPI app needs core features that users want and regulators demand. Your next big task is to define these essential functions after analyzing the market.

UPI payments and QR code scanning

Money transfer between bank accounts is the key feature of any UPI app. Your app should support both P2P and P2M transactions. Users need to send money to any linked bank account within seconds.

QR code payments drive in-person UPI transactions. This market reached USD 9.98 billion in 2022 and grows at 16.9% compound annual growth rate. Your app needs these QR features:

1. Users can generate their own QR codes to receive payments
2. Scanning merchant QR codes works for payments
3. Minimal steps process transactions after scanning
4. Quick access to saved QR codes

Your app should handle various transaction types beyond simple transfers. Users can schedule future payments and set up automatic payments for subscriptions. QR codes work smoothly across retail stores, restaurants, ecommerce platforms and P2P transfers.

Bill payments and recharge options

Modern UPI apps do more than move money. Users want to pay all their bills in one place. Your app should help them pay electricity, water, gas, internet bills and other utilities.

Mobile recharge is another key feature. Quick top-ups for prepaid connections, both personal and contacts, have become standard. This simple feature gets used often since mobile recharges happen frequently.

Data from leading apps shows that bill payment features improve user retention by 40-45%. Apps covering more utilities and telecom providers see better engagement.

Transaction history and balance check

Financial apps must have detailed transaction records. Users want quick access to their history to track spending, verify payments and stay aware of their finances.

Transaction history should:

• Show all details like date, time, amount and who sent or received money
• Let users filter by date, status and type of transaction
• Create downloadable transaction reports
• Load records in smaller chunks for better performance

UPI Lite transactions show up in the app's history instead of bank statements. This makes in-app records more important. Quick balance checks for all linked accounts mean users don't need separate banking apps.

Cashback, rewards, and loyalty programs

Rewards help get and keep users in the competitive UPI space. A smart rewards system becomes vital when you build an app like PhonePe.

Cashback offers give back some transaction value to users. These rewards work as:

• Percentage returns (like 10% cashback)
• Fixed amounts for specific transactions
• Fun scratch cards after payments
• Special offers for bills or shopping

Users should have multiple ways to use their rewards. Good apps let them transfer cash to bank accounts, pay bills, add to wallet balance or collect points.

These core features form just the base. Your app's success depends on how naturally these functions work together in a secure, friendly interface. We'll explore the technical details of building these features in upcoming sections.

Choose the Right Tech Stack

Your UPI application's success depends on picking the right technology stack. Good tools support your current needs and help you grow as more users join.

Frontend and backend technologies

You have several great options to build what users see and interact with:

React.js excels at building fintech dashboards and web applications with reusable components that speed up development. Angular gives you a solid structure for enterprise-grade financial software with built-in modules and specific code organization. Vue.js offers a lightweight, fast solution that works great for mobile dashboards.

Your project size determines the best choice, React leads the market because of its rich ecosystem, though Angular works better in highly regulated enterprise settings.

The backend needs these technologies to handle transactions, authentication, and API communication:

Node.js shines with its event-driven architecture, perfect for processing payments quickly. Java (Spring Boot) brings trusted reliability to enterprise-grade financial applications. Python (with Django or FastAPI) fits well for AI-driven fraud detection systems.

Most fintech apps use Node.js or Java backends, while Python remains the top choice for evidence-based insights and analytics.

Database and cloud infrastructure

Financial systems need reliability and ACID compliance. Here are the best database options:

PostgreSQL - Financial teams prefer it for structured data because it handles transactions well. MongoDB - Gives you flexibility for user data and unstructured cases. Redis - Works best for caching and tracking transactions in real-time.

PostgreSQL stays popular in UPI applications because it handles transactions exceptionally well.

AWS and Google Cloud give you the flexibility to handle changing transaction volumes. Cloud-native UPI solutions help you process thousands of transactions at once with better performance and resilience.

Third-party APIs and SDKs

Building an app like PhonePe requires integration with specialized services:

UPI SDK helps you accept UPI payments through major acquirers with collect, intent, and in-app flows. It blends into merchant apps and offers features built for UPI transactions. Payment gateways like Stripe provide reliable infrastructure that's easy to integrate.

You'll need both a mobile app component and backend server integration. Your server handles payment intents while your app manages user payment flows. This setup keeps things secure and smooth for users.

Why CISIN recommends Flutter and Node.js

Flutter stands out as the best choice for cross-platform development. CISIN's mobile application development team uses Flutter to create natively compiled applications for mobile, web, and desktop from one codebase. This helps build complex financial applications faster and cheaper.

Node.js works great with Flutter for backend development. It handles many requests at once with its non-blocking, event-driven architecture. UPI apps need this power to process thousands of transactions simultaneously.

This technology combination gives you:

• A faster launch with a unified codebase
• Performance that stays consistent across platforms
• The ability to handle sudden transaction spikes
• Strong community support and many libraries

Your tech stack choices affect costs significantly. The right frameworks can save USD 30,000-50,000 in development costs.

Tech That Scales With You

Select a flexible architecture that allows your application to handle unlimited growth without compromising on speed or performance.

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Focus on Security and Compliance

Security is the life-blood of any successful UPI application. App developers like PhonePe must prioritize user data and transaction protection. UPI fraud cases rose by 85% during 2023-2024, with losses doubling to INR 1,087 crore.

Data encryption and secure login

Strong encryption protects sensitive information throughout the payment process. Your UPI app needs end-to-end encryption to protect transaction data from source to destination. This creates an unbreakable tunnel for information transfer.

Your app's security should include these vital elements:

• Certified Secure APIs: Use APIs provided by NPCI that contain built-in security protocols and undergo regular audits
• End-to-End Encryption: Apply robust cryptographic techniques to safeguard all communications between users' devices and UPI servers
• Two-Factor Authentication: Require users to provide two separate forms of identification before completing transactions

Multi-layered authentication works best for secure logins. This combines something users know (PIN), something they have (registered device), and something they are (biometrics). Additional barriers protect accounts even if one security layer fails.

PCI DSS and RBI compliance

Payment Card Industry Data Security Standard (PCI DSS) compliance is essential for any payment app. This global standard defines security requirements to protect environments where payment account data is stored, processed, or transmitted.

PCI DSS has these core requirements:

1. Install network security controls
2. Apply secure configurations to system components
3. Protect stored account data
4. Use strong cryptography during transmission
5. Protect systems from malicious software
6. Develop and maintain secure systems

PCI DSS applies to all companies that accept, transmit, or store cardholder data, whatever their transaction volume. You'll need an Attestation of Compliance (AoC) before your app can process payments.

RBI guidelines for UPI apps cover transaction limits, customer authentication, fund settlement, and dispute resolution. These rules protect users' data and prevent fraud.

Compliance means more than checking boxes, it protects users. Regulatory frameworks evolve with UPI's growth to address new security challenges.

Biometric authentication and fraud detection

Biometric authentication improves security while making the user experience better. These systems verify user identities through facial features, fingerprints, or voice patterns.

Biometric security offers several benefits:

• Higher Security: Biometric data is harder to steal or replicate than PINs or passwords
• Faster Transactions: 67% of customers prefer biometric authentication over traditional methods
• Reduced Fraud: Businesses can lower fraudulent transaction risks by a lot

AI-driven systems should analyze transaction patterns continuously for fraud detection. The Random Forest algorithm helps separate legitimate from suspicious activities. These systems can spot anomalies, flag unusual behavior, and block unauthorized access with up-to-the-minute data analysis.

Device binding adds another vital security layer. This technique lets only approved devices access accounts and perform specific tasks, which reduces unauthorized transactions.

Your app should send instant alerts for every transaction. Users can quickly block access if they spot suspicious activity.

It's worth mentioning that collecting biometric data improves security but raises privacy concerns. Your app must follow data protection regulations like GDPR and protect this sensitive information.

To sum up, security isn't just a feature, it's the foundation of a trustworthy UPI app. Building an app like PhonePe requires top-tier security and compliance from the start.

Design a Seamless User Experience

Your payment app's success depends heavily on its user interface. Statistics show that 68% of customers abandon transactions after facing usability issues. About 88% won't return after a bad experience.

Simple onboarding and KYC flow

User adoption rates directly link to a smooth onboarding process. UPI merchant onboarding needs businesses to register on the platform with KYC documents, bank account details, and required information. Digital KYC verification APIs help speed up identity checks and document verification for regular users. This reduces manual reviews and stops users from dropping off.

Key elements you should think about:

• Clear step indicators showing progress
• Minimal data collection (only what's needed)
• Simple documentation upload options
• Quick verification feedback

Multilingual and user-friendly UI

Language support dramatically expands your reach in the Indian market. A well-laid-out multilingual user interface makes your app available to more users and shows respect for different cultural nuances.

Steps to make it work:

1. Simple interface elements reduce complex localization challenges
2. Clear, concise terms translate well across languages
3. Text expansion needs more space in many languages than English
4. Native speakers can catch cultural misalignments during testing

Users with disabilities benefit from accessibility features like larger touch targets, screen-reader compatibility, and proper color contrast.

Live sync and fast load times

Payment apps need speed. Studies show that load time optimization in real-life scenarios boosts user satisfaction and retention. Analysis during peak hours (4 PM - 8 PM IST) shows critical performance issues that affect smooth transactions.

Ways to boost performance:

• Fast transactions over fancy animations
• Efficient data caching mechanisms
• Optimized API calls and response handling
• Progressive loading for non-critical elements

Careful optimization helps deliver practical insights that boost app responsiveness and streamline transactions, even during peak traffic.

Usability testing and feedback loops

Real users should test your app before launch. This helps spot UI elements that might not work well across different cultures and languages.

Proven testing methods include:

• Task-based usability testing finds bottlenecks in key processes
• Screen recordings analyze user behavior patterns
• 5-second tests gage initial comprehension
• Session replays study navigation paths

Users often ask for customizable spending limits, live notifications, and tools to visualize spending patterns. Timely pop-ups with financial tips can boost user financial literacy.

Note that usability needs continuous refinement based on user data.

Develop, Test, and Launch Your App

Building a UPI app takes careful execution after you plan features and choose your tech stack. The next step brings your app to life through development, testing, and deployment.

Agile development and sprint planning

Agile methodology works great for UPI app development. Teams can divide work into short sprints that last one to four weeks. This approach helps get products to market faster and saves costs. Each sprint kicks off with a planning meeting. Your team picks specific backlog items and sets clear sprint goals.

Sprint goals for UPI apps could target "Enable secure QR code payments" or "Implement bill payment functionality". Team members discuss progress, tasks, and challenges in quick 10-20 minute daily scrum meetings. This open communication helps spot issues early and keeps development on track.

Functional and performance testing

UPI applications handle money, so testing becomes crucial. Start by checking if each feature works correctly. Use test UPI IDs like "success@razorpay" for successful transactions and "failure@razorpay" to see how your app handles failures.

Your app should handle peak transaction loads, especially between 4 PM and 8 PM IST when payment apps see the most traffic. Tests must cover transaction accuracy, security risks, and performance under pressure.

Beta launch and user feedback

A beta test can make or break your app's success. WhatsApp tested its digital payment feature with a small group in India before wider release. Swiggy took a similar approach by testing its UPI plug-in with team members, partnering with Yes Bank and Juspay.

Limited release helps catch issues that internal testing missed. User feedback comes through in-app forms, interviews, and behavior analytics. This data helps polish your app before public launch.

App store deployment checklist

Get your app store presence ready:

1. Run tests with TestFlight for iOS beta testing
2. Check App Store Guidelines early to match your design with requirements
3. Get screenshots, app previews, and descriptions ready
4. Fill out privacy information for the Privacy Nutrition Label
5. Add accessibility details for each supported platform

Note that app store review looks at every version of your app and its content, including in-app purchases and asset packs. Factor this review time into your launch schedule.

Post-Launch Growth and Retention

Your UPI app launch marks just the beginning. The real challenge lies in growing your user base and keeping them hooked. Here's how your PhonePe-like app can succeed in the competitive payment world.

Marketing and user acquisition

A balanced mix of organic and paid strategies works best. Content marketing creates valuable resources that pull users in while building your brand's authority in payments. Smart email campaigns send customized promotions straight to potential users, which builds relationships without breaking the bank.

A social-first marketing approach sparks organic discussions when users have great experiences. Working with affiliates who bring visitors for a fee can quickly expand your reach.

Gamification and engagement tools

UPI apps use clever gamification to keep users coming back. Scratch cards, cashback points, and challenges turn everyday transactions into fun experiences. Studies show scratch cards work as powerful hooks, while cashback points make users more loyal.

Adding gamification elements made users transact 27-35% more frequently. Users love instant rewards like transaction streaks that give them quick wins.

AI-driven personalization

AI makes payment experiences smarter through customized interactions. By 2025, 75% of financial institutions will invest in technology that meets customer needs, with 90% focusing on faster, more accurate transactions.

AI looks at spending patterns to create targeted offers and services. Tools like Shopping Muse let users search naturally - you can type "beach formal" and get results that match your style.

Monitor KPIs and iterate features

These key performance indicators matter most:

1. Retention rate - how many users come back after installing
2. Stickiness (DAU/MAU ratio) - how often people use your app
3. Net Promoter Score (NPS) - what users think about your service
4. Session depth - interactions during each visit

Better retention rates mean more future earnings. You can boost retention by finding where users drop off in your app data. Regular updates based on what users say keeps your app competitive.

Ready to Build the Next PhonePe?

Partner with CISIN's financial application experts to turn your UPI concept into a thriving, secure business.

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Conclusion

A UPI payment app like PhonePe can help you tap into a market worth billions that's growing faster than ever. This piece walks you through each step from concept to launch.

Your payment app's success depends on understanding the UPI ecosystem and NPCI guidelines well. A full picture of the market helps you find opportunities even with big players like PhonePe, Google Pay, and Paytm dominating the space.

Your app needs core features like smooth UPI payments, QR code scanning, bill payment options, and a rewards program that works. The right tech stack makes a huge difference - Flutter and Node.js are budget-friendly choices that deliver results.

Security should be your top priority. Strong encryption, biometric authentication, and fraud detection systems need to be built in from day one. The user experience plays a vital role too - quick loading times, easy onboarding, and multiple language support can boost adoption rates.

Agile methods help keep the development process on track. Your app needs thorough testing before going public. Once launched, smart marketing and user engagement tools will help grow your user base.

The UPI payment market keeps growing at an incredible pace. Your app can succeed by fixing specific user problems and standing out from the 5-year-old competition.

Start development with clear goals and realistic timelines and budgets. A $30,000-$50,000 investment can bring great returns if done right.

Note that user trust builds slowly but can disappear in seconds if security fails or the app performs poorly. User feedback and constant improvements are key to lasting success.

CISIN's software development experts can guide you with their deep knowledge of financial applications. Their technical know-how can turn your UPI app idea into a thriving business.

India's digital payment revolution continues to unfold. This guide gives you the knowledge to build an app that could become the next UPI success story. The chance is here - it's time to build!