As online shopping continues to get more ubiquitous, payment APIs have become an essential part of the transaction experience. These tools allow merchants to process transactions safely and quickly while offering a smooth experience for the customers. If you want to know more about payment APIs, here’s how they work and how to select one for your business.
What Are Payment APIs?
Application programming interfaces (APIs) are protocols that create a secure line of communication between a payment processor and a merchant’s app or website. This gives merchants a convenient way to accept online payments without having to store sensitive customer information on their servers.
Payment APIs fall under three categories: direct, hosted, and wallet payments. Direct payments are the most basic type of payment, allowing merchants to process payments on their app or website. Hosted payments include services like PayPal or Stripe. Wallet payments include digital wallet options, such as Google Wallet or Apple Pay.
Benefits of Payment APIs for Merchants
The main reason why payment APIs are so popular is that they create a frictionless checkout experience. The more friction there is at the point of sale, the lower your conversion rates get. APIs also allow merchants to take things a step further, helping them identify the best shipping options, close gaps in contact information, and avoid most errors or declines.
The ease of use of this checkout experience also increases your customer loyalty. The more successful transactions a customer has with you, the more likely they’re to return, particularly if they don’t have to re-enter their payment information. Other benefits of payment APIs include:
- Gleaning better insights
- Improving cash flow
- Supporting in-app purchases
- Streamlining compliance
Selecting a Payment API for Your Business
Looking for the perfect payment API for your company? If so, start with the key features. For instance, if you offer subscription-based products, your API will need to support recurring payments. If you operate internationally, you’ll need a payment API that can process payments in multiple currencies and offers various payment methods.
Another important factor to consider is how compatible a payment API is with your existing platforms and systems. If an API can integrate seamlessly with your eCommerce platform, this can save you a lot of money and time. Look for a payment API that offers plugins, developer-friendly documentation, and software development kits (SDKs).
Finally, consider the fees. Some payment APIs charge a flat fee for each transaction, whereas others charge a small percentage of the full transaction amount. Compare fee structures and pricing structures to find the right API for your budget.