Digital payments are skyrocketing. Just in the last five years, the global transaction value of digital payments grew from $3.36 million to $8.49 million (Statista). Digitalising payment systems is a necessity for companies that want to keep up with market innovation and avoid playing catch-up at a later date. But how do you digitalise payments? APIs are a crucial part of that. This article guides you through what payment APIs are, their benefits, and how you can integrate payments via API.
The term “Application Programming Interface” (or API) refers to a set of rules that allow one application program to communicate with another in such a way that the second can be used as if it were part of the first. The idea is that you write your own software using these APIs, which will work together with any other programs that are written using those same APIs.
A typical example of this is the Java programming language’s built-in classes like String or Integer. These classes have been designed so that programmers can use them without knowing how the underlying computer system works. They just need to know what methods to call on the class objects to get the desired results. This makes it possible for many kinds of programs to work together seamlessly.
There are four main APIs: SOAP, RPC APIs, Websocket APIs, and REST APIs. These work differently and support different use cases. APIs can also be public, private, or partner. Public APIs, as the name suggests, are open to the public and can be used by anyone. On the other hand, private APIs are designed only for internal use by the company’s developers. Partner APIs are APIs that companies may share with business partners through a unique onboarding process.
Both APIs and Webhooks enable communications between two applications. However, APIs are request-based, whereas Webhooks are event-based. You don’t need to make a request for Webhooks manually. Instead, you set up an event, and every time that event occurs, the webhook is triggered. APIs, on the other hand, require a specific request to work.
Webhooks are considered a “push” mechanism, pushing information associated with an event to the entity listening for it. For an API, a user can obtain information using a “pull” mechanism, which is a “GET” API request type, thus pulling requested information.
Integration is the process by which two or more applications communicate with each other through an interface to perform some joint function. For example, when you send money from your bank account to someone else’s, there is an integration between your bank and theirs. You don’t actually talk directly to their bank; instead, you go through your bank. Similarly, when you pay for something online, there is an integration where you make a purchase request to the merchant’s website, and then the merchant sends the information back to your browser, where it is presented in an easy-to-digest, user-friendly way. In both cases, the integration is provided by some API.
A Payment API is a set of rules that allows enterprises to accept payments from their clients and disburse funds to them. It provides a standard way for two sites to interact and exchange information. Payment APIs allow for faster, cheaper, and more secure transactions between merchants and consumers. A Payment API usually includes the following:
Payment APIs can open the door to the payment digitalisation world. There are various payment solutions available in the market, from payment processors to orchestration platforms, also known as orchestration layers. APIs are a way to connect to them so you can offer innovative services and experiences to your customers without needing your own in-house solution. Here are some of the ways that you can use Payment APIs to improve both customer services and internal operations:
It is essential that payment APIs are secure, reliable, and flexible. Developers should be able to implement them quickly into their company’s existing systems.
Yes, you can integrate payments via API. Integrating payments via API should be a straightforward and quick process, especially as you don’t have to build your own API, saving you time and resources. Payment solutions should have their own APIs readily available and accessible on their documentation portal. For instance, you can check Imburse’s APIs here, which are made available using the open API standard to make for easier adoption by its users.
Building APIs from scratch is complex, time-consuming, and costly. The initial cost to build is only the beginning, as maintenance of an API often requires a dedicated team of engineers who may also be tasked with the release of new versions. These can happen as often as every 2-3 years.
Plus, creating APIs requires a good understanding of the system you are trying to connect to and a deep level of technical expertise. The good news is that you don’t actually need to develop your own payment API. There are already plenty of existing ones out there. You can contact the provider of the service you wish to offer and ask them whether they provide their own API. If they do, you’ll learn more about how to use it by reading their documentation.
Do note that there is not a ‘one-size-fits-all’ provider when it comes to payment API providers such as gateways and PSPs. This is especially in the case of enterprise insurance companies who operate globally and absolutely must cater for the payment preferences of their target audiences. That’s where Imburse comes in, enabling easy access to the entire payments’ ecosystem.
Payment APIs offer a myriad of advantages for companies. We have touched on this in the previous section. Now, let’s look at some of the benefits in more detail:
Payment APIs can be used to fully automate the payments process, and to instruct both one-off or recurring payments and single or bulk file payments. APIs should be flexible enough to integrate with other software tools that enable a more unified experience. This could be, for instance, accounting or reporting software.
APIs enable companies to integrate with other software directly. Should they integrate with this software manually, the operational costs and associated fees would be much higher. In general, the process would be more complex and require an abundance of dedicated resources.
The customer data and payment information is stored by the API host, not the merchant. So, if you integrate with a provider using their API, you can REST assured that this provider complies with all the industry regulations. APIs should be tested frequently to mitigate vulnerabilities and protect against cyberattacks. It is crucial to ensure that your API is secure, whether you own it or are simply using it.
Modern fintech organisations offering payments APIs leverage global scale cloud hosting companies. They utilise data centres with military-grade physical security combined with the highest standards of network resilience and active defensive measures to ensure the best possible security. Moreover, they utilise microservice architectures to enable highly scalable solutions that can respond dynamically to meet the constantly evolving needs of client solutions.
The main benefit of payment APIs is the enablement of payment digitalisation. With APIs, you can more easily integrate with innovative payment solutions available on the market. Most solutions will have their own APIs that you can request access to.
This makes it much easier, faster, and inexpensive to provide customers with a better experience, compared to doing it yourself. You can use APIs to offer more payment methods through the use of payment providers or connect with platforms like Imburse, which offer access to any provider or acquirer in the world.
There are some considerations to take into account when using a third-party API. To start with, APIs should be fully secured against vulnerabilities to prevent any outside access or, even worse, a cyber-attack, especially when handling customer or payment details. It is also crucial that the third party provides easily accessible and clear documentation, such as a step-by-step process on how to access and use the API.
The third party should also provide a staging environment, like a sandbox, that companies can use to test the API and make sure everything works as expected before making the changes live. Lastly, the API needs to be adaptable to new features or tools being added to the system, or even update rollouts, avoiding “breaking changes” wherever possible to allow production API users to optionally accommodate new features / capabilities at their own discretion.
Imburse offers a single API consisting of a series of endpoints that have been carefully curated to facilitate all of your payment needs. This includes, but is not limited to, payment initiation, management and configuration. Behind this API sits a modern microservice architecture that leverages an open tech stack. This allows solutions to be developed rapidly to take advantage of the best technology choices available.
Imburse clients have access to a suite of configuration API endpoints for selecting their preferred providers, acquirers as well as the payment methods that they want to offer. Payments themselves can be initiated by expressing an intent to collect or payout by creating an instruction using our transaction API endpoints.
For merchants selling a subscription-based product or service and insurers managing policies that can span for several decades, having the ability to manage the payment itself is crucial. Our API empowers its user to do just that, be it changing the schedule of a monthly insurance premium collection, updating customer information or even managing the lifecycle of a direct debit mandate by way of our dedicated mandate management tool.
At Imburse, we pride ourselves on offering a single API to manage all of your payment needs, giving you the flexibility to enhance your payment capabilities with a robust solution that you can rely upon.
Imburse is a cloud-based middleware connecting large enterprises to the global payments ecosystem, regardless of their existing IT infrastructure. Through a single connection to Imburse, enterprises can collect or pay out using any payment technologies and providers around the globe.
In a world where consumers’ payment preferences and technologies are ever-evolving, Imburse works with insurers to future-proof their payment capabilities. Regardless of the business area, market, or requirements, Imburse will connect you to your choice of technology and provider.
Reach out to our team should you want to discuss how Imburse can help you. Our team is happy to show you what our platform can do for your business and offer you a free demo.