A definitive guide to understanding API banking

To design fast & seamless purchasing experiences, Acquiring APIs are the first choice of businesses and developers. Acquiring APIs consists of Payment gateway APIs & Online card acquiring APIs.

Any company or individual who has an app or website loves payment gateway APIs. These APIs integrate with your company’s checkout system to a payment acquiring networks like VISA, Mastercard, Discover, etc., making the purchase of your product secure & effortless for your customers.

Online card acquiring, on the other hand, helps you receive payments on behalf of the web merchants with the use of credit cards like VISA, MasterCard, or internet banking.

So, now if you have an app or a website, do you need to really use this? Let’s dig in deeper to find out the answer.

The Payment Gateway API

Payment gateway API allows you to maintain the control of user experience & user interface - that is why businesses love it. If you're using a 3rd party hosted checkout page then your customers are bound to have a disconnect because of the sudden changes in the brand's image.

Imagine an enthusiastic shopper changing her purchase decision when she sees a 3rd party hosted checkout page loading. This happens due to the change in the thought process when the experience shifts from shopping to paying.

Integrating Payment gateway APIs into your website will reduce the possibility of change in the customer's thought process. This helps in maintaining customer's decision making momentum till the purchasing is done.

Maintaining the user experience is just one of the benefits of integrating payment gateway APIs. There are quite a few more like -

  • Using a robust payment gateway API, your business can interact with customers at different places like your mobile app, Twitter or Instagram.
  • You will get real-time data feeds that’ll help you understand & act on the buying behaviour of your customers.
  • Your customers will get a wide variety of payment options.
  • Your customer’s data will be secure & remain out of your hands.

Now if you're a developer who needs payment gateway APIs, then here is a checklist that you've to keep in mind before zeroing down on one.

  • A modern design - Today the most common design is RESTful, which has become the “API standard”.
  • Security - Since the transaction involves credit cards and other financial details, security should be a significant concern. Check whether your payment gateway APIs have PCI compliance. PCI compliance ensures that all companies that process, store & transmit credit card information maintains a secure environment.
  • Ease-of-use - Look for a payment gateway API that provides seamless integration, and whose functionality is easy to use & test. Also, the process of taking APIs to live from the sandbox environment has to happen with fewer hurdles.
  • Proper documentation - You should look out for a payment gateway API that has been perfectly documented. For example, Open's APIs are perfectly documented and makes the job easy for developers.

In nutshell, for all online businesses out there checkout is the point where the customer's money is at - therefore give it the time & attention it deserves.

Online Card Acquiring APIs

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Online Card Acquiring APIs help you collect online payments on behalf of a web merchant with the use of bank cards or internet banking. Normally, internet acquiring assumes accepting cards of Visa, and MasterCard.

The difference between online card acquiring and payment gateway is that Online Acquiring APIs facilitates transactions, while payment gateway is a tool that communicates the approval or decline of the transaction between businesses & their customers.

The various stakeholders in this process include the acquirer bank, issuing bank, cardholder, payment system and a service provider.

Acquirer Bank:
It is the bank ensuring the clearance between the bank issuing the card & internet retailer. The retailer would have got a current account either with the acquirer bank or with some other bank in the country. The acquirer bank guarantees the transfer of funds to the retailer’s account, irrespective of the bank they have opened their account with.

Issuing Bank:
This is the bank that has issued the customer’s card and also owns their account. If the acquirer bank communicates a positive answer to some purchase, then the issuing bank guarantees the release of funds from the customer’s card account & transfers them to reimburse the acquirer bank.

Service provider:
These guys integrate the retailer’s website with the acquiring bank. For example, Open is one such banking service provider that is being subscribed by many tech businesses in India. They currently cater to more than 5 lakh small businesses in India.

Though APIs is a technical concept a lot of companies have strategically made use of it. Acquiring APIs have helped businesses shift online & strategically position them according to the demands of customers. And hence, acquiring APIs is significant now more than ever. On that note let's move onto our next chapter on KYC APIs - the last one from the list.

See you there.