Quite simply, the payments industry is awash in technology. Just by using apps on a smartphone, a person can conduct almost all the financial activity they want, from checking bank account balances and making purchases with a digital wallet to sending money to friends and family. These experiences are often easy and intuitive, satisfying consumers’ desire for convenience and ease of use.
Technological innovation affords businesses similar benefits. Streamlining the payment process and supporting a range of payment methods improves customer satisfaction, drives revenue growth, and promotes brand loyalty. Merchants are also using technology to identify consumer habits, tailor advertising to specific customers, and improve customer service processes.
In this new era of payments, where technology reigns supreme, teams of software engineers are needed to build, maintain, and improve the apps and online services that undergird modern commercial activity. It is no exaggeration to say that software developers have become as integral to the payments industry as the bankers, credit portfolio managers, and the cadre of suit-wearing traditional professionals one envisions when thinking of the payments industry.
While the importance of software developers may come as no surprise, there is one unsung hero of the payments industry (and technological progress more generally) that many readers may not be familiar with: APIs.
No matter who you are and what online service you’re using, APIs are likely responsible for making the system function. Without them, the job of a software developer would become exponentially more complicated and many services would cease working. According to one estimate, API calls make up 83% of all web traffic. But what are APIs, and why should the payments industry care about them?
What is an API?
API stands for application programming interface. This technical sounding term may conjure up feelings of confusion, perhaps mixed with boredom, for many readers, but APIs are as simple to understand as they are important.
Broadly put, an API is a set of programming instructions that allow one software application to directly communicate with another. Through this communication, one application can get the other to perform a variety of tasks, from returning an answer to a specific query to initiating a complicated procedure.
Here is an analogy that may help; imagine sitting in a restaurant and reading the menu. While the menu lists everything you can order, the actual ingredients and activity needed to make the meal are tucked away in the kitchen.
To access the meal, you give an order to a waiter or waitress, who takes that request back to the kitchen staff; when the food is ready, they will bring it out to you. In this way, APIs are like the wait staff, while the menu and kitchen are like the different applications.
Where are APIs used?
The short answer is almost everywhere; examples of APIs in action are plentiful. Have you ordered a ride through Uber or Lyft? You can thank APIs for making that happen. They are what allows the ridesharing app to seamlessly communicate with Google Maps and whichever payment method you choose, so you can select a location, hail a ride, and pay for the service, all in one place.
In the payments industry, APIs allow people to make online payments, check when bills are due, keep track of their finances, and conduct a variety of other payment-related activity. In fact, almost all online activity relies on APIs in some capacity.
The importance of API documentation
In order to utilize the services APIs enable, consumers only need to interact with whatever interface they’re using. Take Google search as an example. To successfully Google something, a person does not need to know what is going on under the hood, so to speak; they just need to know how to navigate the interface.
For developers, it’s a different matter entirely. Consider a developer who designs a new application for consumers looking to keep track of their finances. The software engineer needs to configure the app so it can successfully communicate with the user’s bank via that bank’s API. To make this work, the software developer needs to know what information the bank’s API requires, and what responses (or actions) the bank will support.
Luckily for developers, APIs come with documentation. API documentation is a set of technical instructions for how to effectively connect with and use an API. It details exactly what an application needs to send to the API to get it to work and what the possible outcomes are.
The restaurant analogy from above can help illustrate the importance of documentation. You cannot order an entrée by speaking gibberish to the waiter. Moreover, the options available to you are bound by what’s on the menu and what ingredients are in the kitchen. If you start ordering items not on the menu, or ask for something that’s out of stock, you will not end up getting what you want. In this way, the menu, combined with knowing how to properly order from the waiter, serves as documentation.
Challenges with APIs
With so many APIs out there and mountains of documentation to go through to know which API is best for a specific project, developers have their hands full.
Returning back to the example of a developer making a financial management application, the app needs to be able to talk to different banks. Since each bank may have its own API (if it has one at all), the developer needs to be familiar with the documentation for each API. What works for one bank may not work at all for another.
Developers do not face this challenge with just financial management apps. Navigating complex documentation is required in everything from designing online payment apps to integrated point of sale (POS) software. This complexity can hamper innovation and cause headaches for software developers.
Helping developers become more effective
To help developers out, some companies have developed platforms which enable easier access to API documentation, among other essential improvements.
For example, Worldpay recently rolled out Worldpay for Developers, a site with a variety of tools and features to help developers quickly find critical information and explore Worldpay’s different product offerings.
The website has a code-friendly dark-mode user interface and a simple design to facilitate easy navigation. Crucially, the site is designed to help developers figure out which Worldpay APIs are best suited for their specific needs. It allows users to select from four common use cases:
- Checkout – for taking customer payments while still meeting the lowest PCI compliance level, SAQ-A.
- One-off payment – for accepting one-off payments from customers without storing their card details.
- Payment with a stored card – when saving card details to help customers make future payments more easily.
- Recurring payments – when setting up agreements to authorize regular future payments from your customers.
After selecting a use case, the developer will answer a few questions to help identify the requirements needed for their application. Based on these answers, Worldpay can adjust the resulting process accordingly.
Conclusion: APIs make the world go round. Companies can make it easier for developers to use them.
As the bedrock of almost all online activity, APIs play a foundational role in modern life. This is especially true in the payments industry, where a multitude of online financial services rely on APIs to deliver seamless experiences to consumers.
But in order to properly use APIs, software developers often need to comb through vast troves of documentation, which can vary from application to application. Streamlining this process, as Worldpay has done through its Worldpay for Developers site, empowers software developers to more easily create and test products, thereby sparking innovation and improving the customer experience.