Fintech 11 March 18

Your business depends on payments. An API could help.

By: Currencycloud
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What is an API?

API stands for application programming interface. It’s the behind-the-scenes mechanism that makes all digital interactions on the web possible. Simply put, an API fields requests, tells a system exactly what it is that you want to do and then returns what you requested back to you — essentially acting as a conduit or messenger.

Take the example of looking for a hotel room on a booking site or mobile app. To book a room, you’d need to see what rooms are available, what hotel those rooms are at and what the cost would be. On a booking site you’d likely be prompted to fill in form fields to search for a room and will probably be given a drop-down menu to make this step easier (to fill in things like place, check-in and departure dates, number of people, etc.). In this instance, an API would retrieve and aggregate information from many different hotels’ websites in order to serve that information up to you and allow you to adjust your preferences in order to book a room. The API is the mechanism responsible for relaying data between the hotel’s website and the end customer on the booking site. APIs govern and enable interactions between applications, devices and data.

What role do APIs play in digital payments?

APIs not only enable different servers to communicate, but they also form the foundation of our user experience within an app or online platform and dictate the efficiency and ease of that experience. When making online payments, APIs are responsible for functions like remembering and auto-filling your billing address and payment preferences, providing real-time transaction status updates, prompting you for the right payment information to execute a transaction and alerting you when you’ve made a typo or incorrect submission (just to name a few). In this way, APIs ensure both the efficiency and accuracy of a payment transaction.

How can payment APIs affect your business functions?

Beyond just the efficiency and accuracy of customer interfaces, if you aren’t managing your payments in the most optimal manner, you’re likely impacting your company’s cash flow. Inefficient or delayed payments to suppliers could negatively affect your credit profile and put you in a poor negotiating position when attempting to forge business relationships.

If your business is not leveraging an API to process transactions, you’re probably using an inefficient payment method which may have an impact on the working capital that’s available to your company. Say you’re making a payment to China; a non-optimal payment process would require you to release that payment five days prior to it being due and would freeze the funds in question for that interim duration (versus letting it remain in your account until the last moment). Furthermore, if your payments are delayed or late due to this procedural inefficiency, you’re also likely paying higher fees to compensate. The same is true of your internal payments. If your payroll payments aren’t processed on time because you’re using a subpar provider, then you’re negatively impacting the happiness and trust of your employees. Optimizing your accounts payable and accounts receivable operations via an API is exceptionally important when you’re making cross-border transactions, as these are inherently more complex and cost your company more money than domestic transactions.

APIs can also offer both employees and suppliers greater insight into the payment process — so they know exactly what stage a payment is at in the process and when they can expect to receive it. This allows your business and suppliers to better plan and facilitates smoother functioning and communication. Whatever inefficiencies you’re experiencing with payments, there’s likely an API to help streamline your daily operations in a secure and seamless way.

By: Currencycloud
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