What are Payment APIs?

  • Written By WHISHWORKS
  • 21/09/2021

Consider this for a moment. It is estimated that there will be about 2.14 billion digital shoppers worldwide in 2021 and eCommerce sales are expected to make up about 18.1% of all retail sales. These figures confirm that eCommerce is the way forward for any retailer that wants to remain in business.

To effectively take advantage of the opportunities that this shift to digital offers, it is essential that you focus on the customer journey. This means you will have to focus on offering your customers more ways of shopping and paying and, also, giving them the ability to pay in their currency of choice. After all, this is one of the proven ways in which you can remove friction from your checkout process and increase the possibility of making more sales.

That’s where Payment APIs come in. They allow you to implement several payment solutions quickly and easily while providing all the functionality and security features you would need. Whatsmore, they allow you to gather more data which gives you deeper insights into your customers and lets you market better and sell more.

But what are Payment APIs and what benefits will you gain if you implement them? In this post, we’ll look at these questions in more detail.

What are Payment APIs?

When it comes to choosing a payment gateway, you will typically need to choose between hosted payment gateways and APIs. Although they, ultimately, serve the same purpose there are some important differences between the two.

As the name suggests, a hosted payment gateway requires that your customers leave your site and go to a hosted payment page where they will enter their payment information. When the payment is complete, they will then be redirected to your site.

Although this is a fast and easy way to implement payment solutions on your site, it does have some drawbacks. For one, it is not ideal for your customers to leave your site and, because the page is hosted by the payment provider, you may be limited in your customisation options.

On the other end of the spectrum, with Payment APIs payment providers like Stripe and PayPal expose their complex payment processing infrastructure through simplified APIs. In turn, these APIs allow you to integrate and connect your digital processes to a payment provider’s network and therefore your customer will not have leave your website to conclude the payment.

This gives you a more flexible and intuitive alternative to more traditional hosted options and it is for this reason that many eCommerce retailers are switching to Payment APIs that allow them to process transactions quicker, serve more customers, and make sure sensitive data stays safe.  

It goes further than this, though. While traditional hosted payment gateways basically only allow you to collect payments from customers from your eCommerce site, Payment APIs open up far more possibilities. For example, through the API, you can use the same infrastructure to accept payments on your mobile app and even your business’s social media platforms.

What are the benefits of using a Payment API?

Apart from the increased flexibility mentioned above, implementing Payment APIs in your eCommerce store offers several other benefits.

These benefits include:

  • More payment options. By using APIs, you will be able to offer your customers more payment options. It also allows you to accept payments in a variety of international currencies. More options mean your customers have more reasons to shop from you.
  • Deeper insights. Payment APIs allow you to collect important data on your customers habbits and preferences, which you can use to serve your customers better, market better, and make better decisions.
  • Security. By integrating your digital systems with the payment infrastructure of a payment provider, you will improve security significantly and ensure that your customers’ data stays safe. This is simply because customers’ data and payment information is stored by the payment provider.
  • Better customer experience. Apart from giving your customers a better customer experience as mentioned above, you will also eliminate the need to fill out checkout forms because of the ability to reuse payment information.  
  • Scalability. Because you will be able to incorporate more payment methods easily and, through the use of the API, use the payment provider’s infrastructure, scaling becomes easier, and your site’s performance will improve.

Examples of Payment APIs

Now that you understand what Payment APIs are and what benefits you can enjoy when you implement them on your eCommerce platform, let us look at some popular examples of Payment APIs.

The first, and probably one of the most popular Payment APIs is PayPal. It allows you to offer payment solutions, including PayPal and credit card payments on your eCommerce site. Other features of the API are that you can implement recurring payments, extensive reporting, and payment transfers.

Although Stripe is a relative newcomer to the scene, it is becoming increasingly popular and used by millions of businesses globally. Its API offers a rich ecosystem of tools that you can use to implement online payments on your site. You can, for example, send and receive payments, manage recurring payments, track user accounts, and block fraudulent transactions.

Although it is somewhat limited in respect of geographic availability, the Square API lets you manage online, in-store, and mobile payments. In addition, it also offers you the ability to manage orders and product catalogues.

What to consider when implementing a Payment API

Although we only mentioned three of the most popular Payment APIs, there are many more available on the market today. The problem is, each of these has pros and cons you will need to consider which could get challenging if you do not know what to look out for.

With that in mind, some of the things you should consider include:

  • Design. Remember, the main idea with using a Payment API is that you can use reusable API integrations to simplify your payment processes. Also, you will need to ensure that its design is modern enough and incorporates the necessary best practices to not only keep up with new standards and emerging trends but also makes it easier to implement.  
  • Functionality. Every API available has its own set of features and functionality. As a result, you will need to consider the features that fit in with your specific needs and requirements.  
  • Security. Simply put, the API needs to implement the right security practices and features that enable you to protect your customers’ data and keep you compliant. Ideally, you want to transfer most of the Payment Card Industry (PCI) compliance to the payment provider.
  • Documentation. It is vital that the Payment API has extensive documentation that not only makes its implementation simpler but also makes it easier to solve issues when they happen.
  • Ease of use. One of the main goals of using Payment APIs is to make it easier to implement payment methods into your digital ecosystem. So, finally, the API should be easy and intuitive to use.

The bottom line

Nowadays, customers demand a frictionless buying journey and want more ways to pay than ever before. From a business perspective, you want to use payment solutions that not only give you a seamless way to accept payments but also give you in-depth analytics that allow you to make better decisions while, at the same time, keeping your data safe. Here, Payment APIs are an invaluable tool.

Hopefully, this post helped illustrate what Payment APIs are, what their benefits are, and some of the Payment APIs available. A perfect way to implement these Payment APIs in your business is by using MuleSoft Anypoint Platform. It allows you to integrate Payment APIs into your digital ecosystem quickly and easily.

To find out more about implementing an event-driven architecture and evented APIs, give us a call, or email us at marketing@whishworks.com

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