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Everything You Need To Know About Payment APIs: Features, Benefits, Usage

Everything You Need To Know About Payment APIs: Features, Benefits, Usage
Alex Malyshev
Everything You Need To Know About Payment APIs: Features, Benefits, Usage

The online payments industry is the growing sector of the financial market in the world. According to the McKinsey 2022 Global Payments Report, digital transactions continue to increase, with projected CAGRs of 9 % between 2021 and 2026.

The introduction of new technologies has replaced cash and checks with digital wallets, online banking, and one-click payments. It is becoming increasingly common for customers to conduct online transactions using a variety of methods. One of the most common ways is the use of payment APIs, which can ensure seamless checkout for both merchants and consumers.

Global payments revenue, 2012-2026, $ trillion

Everything You Need To Know About Payment APIs: Features, Benefits, Usage

What is a payment API and how does it work?

API stands for Application Programming Interface which is a software application used for data transmission between two systems. Stax’s Lead Software Engineer Austin Kelsch said that: “Simply put, an API is a way for computers to talk to computers.”

API serves as a set of definitions and protocols that are used to build and integrate software. Using these applications helps businesses to facilitate data exchange and improves business efficiency.

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How do payment APIs work?

Understanding the operating principles of APIs is the key to the effective use of their capabilities. They can help businesses to build, connect, and integrate applications faster and easier. 

Online payment APIs typically reside in between an application and a web server. An API call made by the user directs the program to perform an action, after which the application makes an API request to the web server. The request is made using an API call, which functions as a mediator between the application and the web server. 

Everything You Need To Know About Payment APIs: Features, Benefits, Usage

How can payment APIs be used to bring innovation in businesses?

These types of APIs make business payment processing more efficient and flexible, providing fast integration and scaling up and down. They help to boost customer satisfaction, deliver high-security levels and offer data protection. Using payment APIs, your company doesn’t need to create your own infrastructure from scratch, saving time and resources.

There are you can find the following examples of what you can do with a payment API:

  • Accept credit and debit cards payments
  • Customize checkout fields using actions and filters 
  • Provide bank payments 
  • Offer direct payments to different accounts using specified criteria
  • Personalize features
  • Support invoicing

In short, payment APIs are responsible for providing seamless payment services and money transfers that improve user experience. They can also integrate new products and services with the existing systems, making this process much easier and faster. 

5 Features to look for in a payment API

Adding payments to a software provides you with many benefits for business owners and customers. It offers an improved service experience, simplified operation, and increased security. Choosing the right payment API can prove overwhelming with a wide variety of payment options available. That’s why we have compiled a list of features to look for in payment APIs.

Everything You Need To Know About Payment APIs: Features, Benefits, Usage

Easy to use

As the point title suggests, we need to emphasize usability. Nobody wants the expense of the complicated integration process. APIs are simple and easily accessible. The structure of this API should provide a clear warning of any problems if the code no longer works properly.

Improved security

It is extremely important to provide a high level of security. Your payment API will take extra care to protect your customers’ data and prevent any accidental or unintentional credit card data leakage. Security features such as encryption (p2p) and tokenizing help ensure that transactions remain secure for a complete life cycle. It is also important to provide PCI DSS (Payment Card Industry Data Security Standard) to offer high-security payments. 

Third-party API partners

Third-party payment partners help companies to accept credit card payments, without setting up their own business bank account. If you want to accept payment on your website, you can use third party APIs that let you connect to a payment gateway. To have all of your transactions go through a third-party payment processor, you need simply open an account with them. It also gives an opportunity to control refunds, establish recurring charges, provide currencies exchange, in addition to regular payments.

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Versatile capabilities

Choose an online payments APIs processor that offers many capabilities to your customers. For example, you can enable your customers to make purchases with multiple ways to pay, whether it’s via point-of-sale, mobile, online transactions. It can help your e-commerce business to boost user satisfaction and increase sales.

Clear Documentation 

Before choosing an API provider, pay attention to the state of the documentation. It must be clear, concise, and include sample code. Documentation can make or break the quality of your integration experience. Therefore, it is important that it is in good condition and has no technical debt.

Factors to consider when choosing a Payment API

There are a lot of factors to keep in mind when choosing a payment API service. We highlight the most essential ones to focus on while you are choosing a payment provider. You need to pay attention to features, security, integrations, pricing, and the number of transactions. 

Features

The main factor is the ability to pay by using APIs. For example, ecommerce sites need access to data servers to provide shopping. It is achieved through an API integration that connects the shop to the credit card for payment. However, there are different features that can be useful for your business: providing PCI compliance, supporting different types of cards and transactions in multiple currencies, and recurring billing service.

Number of transactions

It is crucial to choose a payment API provider that fits your current needs and can adapt to business growth. Some companies offer tiered pricing according to the quantity and frequency of transactions. That’s why when you transact more than these limits you will be charged more.

Pricing

Consider payment API companies that offer clear rates. Before choosing the payment services provider you need to clarify the following questions: Are the rates flat? Are contracts binding for a longer duration? The service must be transparent and has the payment requirements documentation.

Compatibility of the devices

Companies have a range of visitors that use various gadgets depending on the audience or location. While some payment processor API works with all devices, some are only compatible with selected platforms. Before making a choice, consider how the APIs perform on various platforms and operating systems.

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Payment APIs impact on the industry 

According to Statista, the total transaction value in the digital payments segment by 2025 is expected to show an annual growth rate of 10.88% with an unlimited amount of $10,7 million. As a result, online transactions are rapidly growing all around the world. 

The payments industry has maintained strict control over the end-to-end delivery of its products, services, and user experience. A more “open API” strategy has been adopted by businesses as a result of the danger posed by the expansion of the internet, portable devices, and governmental pressure to open up the market to fintech and third-party payment providers. 

Nowadays online payment APIs empower users to connect across many digital paths, resulting in quicker and more responsive digital experiences. Their biggest impact is creating flexibility for businesses that give an opportunity to scale up and down. Payments APIs offer a variety of advantages, including a faster, more sophisticated integration without the need to modify back-end processes. 

A payment API improves client experience, enables scalability, permits high security payments and gives greater control over what data is exposed. They also have the power to transform a company, assist its growth, solve technological problems, and accomplish business objectives. Using an API-first approach, you can stimulate the company development and transform online payment methods.

Wrapping up 

Payment APIs help to facilitate data exchange and improve business efficiency, providing a number of advantages: better user experience, faster payment processing, and flexibility. These technologies have quick secure service, ensure a high level of scalability and improve customer satisfaction.

By choosing SDK.finance core payment software with API-driven architecture your payment business can become more flexible and efficient. Our software can help you create payment products, speed up the time to market, and scale easily via its 400+ RESTful API endpoints that allow you to seamlessly integrate with your infrastructure and deliver an unmatched customer experience.

Everything You Need To Know About Payment APIs: Features, Benefits, Usage

FAQ

What is a payment API?

A payment API (or application programming interface) is a software application used for payment data transmission between two systems. Stax’s Lead Software Engineer Austin Kelsch said that: “Simply put, an API is a way for computers to talk to computers.”
Payment APIs are application programming interfaces developed to control payment process. This helps an eCommerce company protect its customers against theft or unauthorized access. They also provide an easy way of managing payment information from multiple payment sources.

How does a payment API work?

Payment APIs typically reside between an application and a web server. An API call made by the user directs the program to perform an action, after which the application makes an API request to the web server. The request is made using an API call, which functions as a mediator between the application and the web server.
API serves as a set of definitions and protocols that are used to build and integrate payment software. Using these applications helps businesses to facilitate data exchange and improves business efficiencies.

What benefits do payments APIs have?

Application programming interfaces allow seamless integration with existing software making sharing information in real-time easier than ever. API technology has revolutionized how payments are handled by providing better and more convenient bank transfers speeds and lower costs.
Payment processing infrastructure enables e-commerce companies to seamlessly handle payment, allowing merchants and customers to optimize payment processing, making transactions faster and safer.

What is payment API flexibility?

Payment APIs flexibility means a convenient payment system with customizable options. For example, businesses can need support for multiple currencies with an option for one-time and one-time payments and naturally, the ability to accept payments on multiple devices based on the customer's preferences.

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