API Driven Future of Payments


The payments industry is thriving and incessantly experiencing disruption driven by new players, endless opportunities and new risks. And the key drivers of this disruption are powerful Application Program Interfaces or APIs. They have entirely transcended technology.

If you look at the history of APIs, they go as far back as twenty years where they have helped progressive companies, like Salesforce, eBay and Amazon scale and grow, have transformed industries, opened up new opportunities and improved rewards against risks of the digital world.

Also, in the travel industry, API-driven public apps like Travelocity and Expedia allow shoppers to choose their best travel options while partner, device or data apps share information, improving sales, logistics or service.

The telecommunications companies are offering messaging, payments and location APIs to reinstate their value chain and revenues.

A banking revolution was underway when PayPal, back in 2004, launched the PayPal API. It opened up some of its platform functions to third-party developers and further expanding its services across markets. Banks could hire dedicated developers to integrate the API in their system.

Even after this, there are many traditional payment providers who are not willing to completely embrace APIs. They consider API programs as technical endeavors, considering them to fall short in achieving real business impact.

However, there are banks and other financial firms who are waking up to the fact that going to market with an API enabled approach will give them a chance to gain market benefits.

As an example, there are data-heavy APIs that give banks a seamless way to sell to third-party companies appropriate data that they can reuse where they can add value to their customers. Also, when a company adopts an API driven development approach, they also make sure that they keep up with the direction of the payments market.

There are industry newcomers like Stripe. They found their success by using APIs to engage both businesses and developers in friendly ways. It is imperative to note that the competition in the ecosystem is fierce today and any market share that is lost now will be harder to recover later. This market is innovation-driven and is becoming more competitive and crowded.

On top of this, there are regulatory changes to meet being driven by governments which are driving the sudden changes. Europe’s Payment Services Directive (PSD2) and Access to Accounts (XS2A), are mandating that financial institutions should provide customers and third-party integrators programmatic access; API-based in most cases, to their data.

There are new and regulatory frameworks taking hold of the market around the world. Those organizations who are not adequately prepared can face high costs of tactical change and find themselves at a significant disadvantage as the marketplace rapidly evolves.

How to make APIs work for your business

APIs are what lies at the core of any digital organization and they are critical for a successful digital transformation. If we look beyond the IT-driven project, there are several reasons why an elaborate API program should be treated as a joint venture between business and technology.

They are, at their core, business products, best designed to address a specific need in an attractive, easy-to-consume way. The calculation is simple: the more people who use the API, the larger the impact it will have.

Agility & Speed: These are two of the most vital development traits that providers need, in order to capture market opportunities. They can be gained best when business and IT work together, in unison, acting rapidly and adequately funding API-enabled opportunities.

Accountability: This is where both business and technology are aware of the core value of APIs to the organization’s digital vision which is enough to embrace and execute an API strategy.

Stability: The market today is evolving and vendor landscape is changing rapidly as larger traditional technology companies are acquiring API management platforms which is helping them make their overall integration offerings more appealing. Hence, sometimes navigating through this environment can become complex.

Analytics and tracking: An effective and mature API platform helps monitor API usage, run-time performance and traffic, API adoption, API economics and various other measures which point to return on investment performance

Documentation & Lifecycle: Achieving efficiency and effectiveness requires tools which help manage the processes for designing, developing, publishing, deploying, versioning, and governing APIs.

The process can get complex and error prone if it is attempted by a tool which is not designed for APIs. With respect to the pace of change, creating a bespoke solution can get very expensive and less than competitive with class leading solutions

Developer portals: A developer portal is what gives developers seamless access to APIs, allowing them to communicate with other developers and with the API host that helps them learn how to make best use of the API. Along with that, it also allows providers to learn from and better understand the community. This can help drive positive business outcomes for each individual involved

Scale: If specific set of APIs become popular rapidly, payment processing API which can be used in mobile apps as an example, the providers can address that demand without performance issues and scale the product easily.

Dual-speed IT: In the IT architecture, an API layer will effectively extract data needed from backend systems and makes the data consumption easy, thereby removing any discrepancies that may hinder innovations, e.g. mobile, web or otherwise.


One of the first steps when moving ahead with API enablement is to start thinking of APIs as collaborative products which help increase business revenue. You can consider it as a board-level move beyond a technological development. This is entirely a new way of working and creating value from the outside in, that requires commitment from both business and IT.

Next, you should identify and understand the key use cases in order to drive quick wins, and then implement and learn from them. Identify what are those areas that the business might be missing out on? Find out where are the new players doing well? Where exactly can you use best the lion’s share of the data for your business?

written by for Emerging Technologies section(s).