Application Programming Interfaces (APIs) are strategically important to companies in the payments sector. They are the digital glue that connects and controls the interaction between back-end systems and different software programmes, such as cloud and mobile applications, ensuring fast and secure communication across ecosystems.
APIs not only help businesses unlock and expose their data for consumption by partners, they transform businesses into data enablers and digital innovators. And trends such as Open Finance, plus increasing customer demand for instant and mobile payments, are putting APIs at the heart of this digital revolution.
Timeline
In the 1940s, British computer scientists worked on a modular software library, storing subroutines on punched paper tape organised in a filing cabinet. This cabinet also contained a catalogue of notes about each subroutine and how to incorporate it into a programme. Today, the catalogue would be called an API because it instructs a programmer on how to use or ‘call’ the required subroutine.
As we moved into the 21st century and the internet grew, so did the importance of APIs. Social networks like Facebook and Twitter used an API platform that enabled them to input, consume and expose data without being reliant on interfaces. Here, the API was viewed as a platform, rather than a social network app.
Enterprises started using APIs in three ways:
Payment sector evolution
Only companies that recognise their role within each digital journey will thrive. Consider the process – when making a decision to book a room, plane, course or service, users require a simple, smooth-running and transparent payment solution to complete the journey. But users are not initially looking for a payment solution; they want to access various products and services, so it is here additional prompts can be useful. This can only be achieved by exposing APIs and plugging products/services into various digital journeys.
WhatsApp is a good example; in Brazil, its APIs enable users to send money as well as photos and messages. While integrating payments into digital journeys is the new trend, the process has to be frictionless and transparent.
As so many customers’ digital journeys involve payments, this sector has the most potential for growth through APIs. The customer touchpoints are vast, as are the opportunities to plug-in services to partners, and those who position themselves as providers of services and a platform will be ahead of the pack.
The benefits
In addition, they speed up onboarding and improve the partner/developer experience – which for a partner can be the difference between choosing one payment provider over another.
Transformation
Traditionally the payments sector exercised tight control over end-to-end delivery of its products, services and the user experience. However, growth in the internet, portable devices, and regulatory pressure to open up the market to third-party payment providers and fintechs have threatened this sector, forcing companies to adopt a more ‘open API’ approach.
APIs give adopters the power to connect throughout differing digital journeys, providing faster more responsive digital experiences.
API impact
Their biggest impact is creating agility; API adopters benefit from a faster, more mature integration, without having to change back-end systems. They give greater control over what data is exposed, support security and scalability (boosting systems not designed to be used in so many different scenarios) and enhance the partner/customer experience.
Strategic focus
APIs require a strategic focus which is why Sensedia offers more than just an API platform. Any solution must detail how APIs can change a business, support its evolution, resolve technical issues and meet business goals.
This digital glue is driving a new wave of innovation centred on sharing services and it’s no surprise to find organisations across all industries are keen to find out more about APIs and how they can transform their business processes.
About Marcilio Oliveira
About Sensedia
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