What is a payment API? Guide for global businesses

Key takeaways: 

• A payment API is an application programming interface that connects your website to a payment processor so you can accept payments efficiently and securely.

• Payment APIs can be customised to meet the needs of your business, such as integrating it to your eCommerce platform to customising the checkout process.

• These APIs can also encrypt data and have advanced security features to protect your business. 

Thanks to advancements in technology, businesses are growing faster than ever before. One big game-changer is payment APIs, making the payment processes easier for businesses that operate internationally. However, 51% of executives don’t feel confident they know how to maximise cross-border sales¹.

In this blog, we'll explore what a payment API is, how it works, and why it's essential for any company looking to expand its reach and succeed in the global market.

What is a payment API?

A payment API (application programming interface) is a set of protocols, tools, and standards that allows different software applications to communicate and process payments securely. It acts as a bridge between your website and a payment processor. The interface transmits payment data to initiate payment processing for eCommerce and other payment needs.

Payment APIs handle various functions including card payment processing and can provide seamless security features like fraud detection, transaction monitoring, and customer authentication to ensure secure and reliable transactions.

By integrating a Payment API, you can offer a smooth and secure checkout experience, accept multiple payment methods, and manage transactions efficiently. The integration reduces the need for extensive custom development, which supports your business and helps you comply with regulatory requirements such as PCI DSS (Payment Compliance Standards Data Security Standard). This way, you can get your product or service to market faster.

How do payment APIs work?

A payment API integrates with your existing platform to facilitate payment processing. 

Here’s a breakdown of how they work.

1. Customer initiation: A customer enters their payment details, such as a credit card number on your website or app.

2. API request: Your business’ system sends a request to the Payment API and the request is made via a secure connection. 

3. Data encryption: The Payment API encrypts the data to protect it from interception and fraud during transmission.

4. Processor authorisation: The encrypted data is forwarded to the payment processor or bank for verification.

5. Transaction approval: The payment processor sends a response to the Payment API to indicate whether the transaction has been approved or declined.

6. API to business: The Payment API decrypts the response and relays it to the business, ensuring the data remains secure throughout. The response is then relayed to the customer.

7. Transaction recording: The Payment API logs the transaction details for reconciliation purposes, helping you track and manage your transactions.

How payment APIs benefit your business

Payment APIs provide a reliable, efficient way to accept payments from global customers while integrating with your existing systems. This lets you scale up and increase your business reach while optimising your payment process. 

With payment APIs, you can boost customer experiences and increase revenue potential by offering multiple currencies and local payment methods, helping you expand your market reach and increase revenue potential.

In addition, payment APIs can offer a smoother payment process, which ensures your customers have a positive checkout experience. This can lead to higher conversion rates.

On top of that, payment APIs can improve cost efficiencies in financial management by reducing operational costs and improving cost efficiencies as you scale. It also lets you reduce manual labour by automating manual tasks like recurring billing, refunds, and chargebacks. This helps you reduce the need for manual labour even as your business expands into new countries.

On top of that, it helps you protect your business and customers. Payment APIs often come with advanced security protocols. By safeguarding sensitive customer information, you reduce the risk of fraud and maintain a positive reputation.

Signs your business needs a payment API

Businesses across industries and services benefit from payment APIs, especially if you process many online payment transactions. They’re increasingly accessible and becoming a popular payment system for eCommerce businesses of all sizes and cross-border enterprises.

Still wondering if a payment API is right for you? Here are some signs you should try it for your business:

• You’re experiencing an increase in transaction volume. As the number of transactions grows from a few hundred to a few thousand, manual processing becomes inefficient and error-prone. A payment API that can handle high volumes seamlessly.

• You’re expanding into new markets. A payment API with efficient cross-border payments can help you reach a broader customer base. It can help you support multiple currencies and local payment methods with localised checkouts.

• You need to address operational inefficiencies: As your customer base increases, manual tasks like processing refunds, managing recurring billing, and reconciling transactions become increasingly time-consuming. Automation through a Payment API can reduce manual labour as you grow.

How to choose the best payment API

When choosing a payment API, it's essential to consider the range of payment methods and currencies it supports, especially if you aim to expand your customer base.

Equally important is the security and compliance of the provider. A trusted API will adhere to industry standards like PCI DSS and offer robust security features such as encryption and fraud detection. These measures are critical for protecting customer data and maintaining your brand's reputation.

Finally, ease of implementation is a key factor to consider. Look for an API that seamlessly integrates with your existing systems and platforms. Easy integration can significantly reduce development time and costs. Comprehensive documentation is also vital for troubleshooting and ongoing management, ensuring that your payment processes run smoothly and efficiently.

Scale globally with less effort using Airwallex Payment APIs

Airwallex Payment APIs are built for global business and support a wide variety of currencies and payment methods. From major card schemes to local payment methods, our Payment APIs make it easy for your international customer base to checkout with payment methods they know and trust. Airwallex can help you accept over 160 local payment methods in more than 130 currencies, making it easier to attract and serve a global audience.

Airwallex is also a trusted payment provider that excels in security and compliance, making it an excellent choice for businesses of all sizes. All our operations are in line with local and international regulations so you can scale globally with speed and confidence.

FAQs about payment APIs

Are payment APIs secure?

Payment APIs are designed with security features and key compliance built-in. Many APIs have fraud prevention systems like Airwallex’s AI-powered fraud detection tool. They also encrypt data to protect it during transfer and maintain compliance with Payment Card Industry Data Security Standards for you.

Can payment APIs handle international transactions?

Customizable payment APIs are ideal for cross-border businesses that need to accept multiple currencies and payment methods. They can also display localised checkouts to improve UX and payment acceptance while complying with local and international regulations. 

Is it difficult to integrate a payment API with my system?

Payment API integration difficulty varies, but many providers like Airwallex prioritise comprehensive APIs with high-quality developer tools so that implementation is as easy as possible.

You'll need some development skills or a developer on hand to customise and integrate your API. With the right provider documentation, prebuilt integrations, and provider support, your API will be ready in no time. 

Sources:

1. https://www.airwallex.com/ecommerce-campaign-2024