Since its inception, APIs (or Application Processing Interface) have been an integral part of the digital ecosystem. Salesforce and eBay were among the first companies to release their APIs in 2000, and since then APIs have burgeoned. ProgrammableWeb is currently the largest directory of APIs on the web, and it currently lists over 16,590 APIs. Infinite interactions are made possible by APIs across multiple industries, including digital payments. For merchants that want to build a checkout experience into their website or integrate payment technology into their software, this is a high-level overview of APIs.


What is it?

An API “is a set of routines, protocols, and tools for building software applications”. Essentially, APIs facilitate communication between applications. These applications include service products, software programs, apps, etc. – all of which can’t be built without APIs. The first uses of APIs included simple functions like search but its uses have since expanded to other innovative applications, such as smart cars, apps, and payments.

APIs differ from content management systems (CMS) like WordPress in that APIs are a set of tools executing a function (i.e. processing a sale) while CMS are a set of pre-existing code (i.e. a general template for a web page). From services such as payment processing to product catalogs, APIs allow developers to build on top or integrate with other existing products.

The influx of startups can be attributed, in part, to APIs as they helped simplify developers’ lives. APIs help developers build products faster and innovate more easily. Remember the static websites of the 90’s? They were a far cry from the dynamic websites that we interact with now – and we have APIs to thank for that. As more websites and applications were built, they began to have common features. As a result, APIs were created so developers didn’t have to build a whole system each time to execute these standardized functions; they utilized pre-existing APIs instead to build much more quickly and creatively.

Cloud power

APIs are a reflection of the trend of moving everything to the cloud. APIs further evolved and scaled with the advent of cloud computing, which helped host them in a way that could support large amounts of traffic. Both cloud computing and APIs have made it faster and easier to build enterprise-level products because developers don’t need to host complex servers and other infrastructure that perform computations, analysis, and execution.

How it works

For a typical merchant API application (such as payment processing on your website), a communication between two systems contains:

  • Server: A computer that provides and runs the API
  • API: The communicator between the server and client, facilitating exchanges of data
  • Client: An application that can retrieve and manipulate data through the API

So the client talks to the API which talks to the server. However, in some cases such as a software integration, both sides may have a server. In that case, the client (the software interface that users interact with) talks to the non-API server (server on the client side) who then talks to the API who then relays the message to the server.

Just as language has its specific structures and syntax, APIs have similar rules. An API has to be presented in a standard way so that developers can clearly understand and build with it. This is why APIs have client libraries of programming languages (PHP, Python, Ruby, .NET, Java, etc.), so developers can choose their preferred way to use the API.

There are two types of APIs. The first is internal and used within an organization or company. The second is external (open) and either used by businesses and developers on a self-serve basis or by partners to integrate business functions (i.e. payment processing) into their software or product.

Build or integrate?

Developers have the option to build their own API or make use of existing third-party ones. The latter provides them with the freedom of not being locked into a specific platform and allows them to build easily and quickly. Developers and software integration partners alike have come to realize that much of the functionality that they need in their software is already available via APIs. So, rather than spend resources building the function from scratch, they integrate APIs from larger platforms (Salesforce) or specialized developers (Payfirma) into their software products. Many developers and companies prefer to partner and integrate as it affords them the time to focus on their core product. Third-party, specialized APIs are also quite often, better, flexible, and more robust than those built internally.

It’s important to choose an API from a company that’s reliable and trustworthy. When researching for an API that will best fit your business, look for one that has:

  • a simplified, standard code structure and error messaging that’s easy for developers to work with.
  • integration capabilities, as well as support and resources to assist you throughout the building process if you’re a software company looking to integrate certain functionalities into your product.


APIs are coming into their own as a product – especially in the fintech industry. Payment companies are using APIs to add another layer of value to their product suite, and software integration partners are using APIs as flexible infrastructure that can be built into their platforms to bring innovative payment options to their customers.

Even banks are dipping their toe into the API pool. There has been buzz lately for banks to invest resources into becoming API providers to allow software developers to build applications that connect to their accounts. Banking service startup Seed has launched a beta API that will allow users “to integrate Seed’s financial services into their own set of apps and tools”. There’s been a lot of recent exploration into how APIs can be integrated on top of the bank platform and how to use “open platforms as the foundation of a digital financial services strategy”.

With increasing investment towards API development and partnerships with API developers, there’s no doubt that the space will continue to grow and evolve.