What is the best practice to encode the string with encryption key(like password) in device
side(android and ios).And to decode that encoded string in server side with the encryption
key used in the device side.
Two types of encryption algorithms can be used by the encryption key server: symmetric algorithms and asymmetric algorithms. Symmetric, or secret key encryption, uses a single key for both encryption and decryption.
Anyone can encrypt a message by using your public key, but only you can read it. When you receive the message, you decrypt it by using your private key. Similarly, you can encrypt a message for anyone else by using their public key, and they decrypt it by using their private key.
You could try one of the following
RSA Encryption:
Encrypt using public key in iOs Device and decrypt it using private key in web service
Host the web service with SSL certificates
Set up a Secured VPN and access the service through the VPN.
Since you mentioned about encrypting passwords.salting and hashing the password is most preferred.
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