Everything you wanted to know about APIs

A payment processing API can improve your customer’s purchasing experience, reduce the risk of fraud and simplify the path to regulatory compliance.  

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Everything you wanted to know about APIs

Sep 24, 2018

Everything you wanted to know about APIs

A payment processing API can improve your customer’s purchasing experience, reduce the risk of fraud and simplify the path to regulatory compliance.

A payment processing API can help your business increase revenue. By itself, that statement should grab your attention. But what makes utilizing a payment API so attractive?

What is a Payment Processing API?

An API stands for Application Programming Interface, which according nGenuity Journal has been defined as “a written instruction that enables two devices, databases or applications to connect and share information.” In other words, “…it’s the behind-the-scenes software language that makes it easier for us to do things online or with our smartphones.”

We utilize APIs all the time, whether we’re conscious of it or not. For example, when we buy an airline ticket through a third-party travel reservations site, an API powers the communication between the airline and the travel provider. Or if we have a Wi-Fi thermostat in our home, an API is facilitating the communication that allows it to remotely adjust the temperature in an individual room.

For its part, a payment API integrates with its existing digital processes can connect a checkout system to a payment network. While the many advantages of such an arrangement probably don’t immediately spring to mind, there’s a good reason that a growing number of companies in the payments space are offering an “open” API that lets merchants integrate existing POS systems with a payment platform.

Core Advantages of a Payment API

The first advantage of using a payment processing API is that it can simplify the payment process (request, authorization, receipt and confirmation). The way a payment API typically works is that an application transmits a message/request to the API, which relays it to the payment processing network, which in turn processes the request and responds to the API, which then relays the response to the application.

One major benefit of a payment API is that it can improve a customer’s purchasing experience by eliminating the need to fill out checkout forms, a tedious task—especially on a smartphone—that can lead to shopping cart abandonment. Thanks to the ability to reuse stored payment information, customers can complete a purchase on a mobile device with just a few taps.

Another advantage of a payment API is that it allows a merchant to innovate. Typically, a basic API payment integration is straightforward, easy to test and readily implemented. But if your company has innovative ideas—and a developer who has the technical expertise to do the customization—an API can be customized to your heart’s content, by integrating external applications, for instance. Meanwhile, a payment API potentially allows a business to keep consistent branding and user experience across channels.

Last, but certainly not least, another core advantage of a payment API relates to security and fraud prevention, which in turn eases regulatory compliance. That’s because customer data and payment information is typically stored by the host (not the merchant), keeping that sensitive data out of the hands of a merchant. This makes it easier for a merchant to remain PCI compliant and EMV®-ready at a time when failing to do so can result in considerable exposure to financial liability.

Other Advantages of a Payment API

There are other features that may or may not be available, depending on the API and processing platform. For example, there’s the ability to store transactions offline and have them processed when functionality is restored. Or the API may be able to support a diverse array of different transaction types beyond the major card brands and common payment methods.

Moreover, a payment API may be able to consolidate all of the data transmitted through the platform, thereby proving helpful data that has the potential to inform a business and marketing decisions.

And software providers have found that integrating a payment API into its software has the potential to provide an incremental revenue stream via revenue sharing with the payment processor.

For companies looking to increase their revenue stream, the future could be as easy as A…P…I.

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