Payment Gateway APIs 

Payment gateway APIs allow businesses to add payment processing functionalities directly into their applications or websites. APIs have been a game changer for businesses, with 88% saying this technology has become more important over the past two years. Why are APIs so useful in the payment space? Because they permit businesses and financial institutions to integrate with innovative third-party payment solutions instead of developing these capabilities in-house. The result is a faster time to market, more payment options and a smoother customer experience. 

This guide covers the basics on payment gateway APIs to help you understand their uses, benefits, and common features. You can learn more about integrating with Onbe's payment gateway API here.  

What is a payment gateway API? 

A payment gateway API is a set of protocols, tools, and definitions that allow software applications to integrate and communicate with a payment gateway.

But first, what is a payment gateway? It is a service that facilitates transactions by authorizing and securely processing online payments. The API—which stands for “Application Programming Interface”—serves as the interface through which merchants or businesses can integrate the payment gateway into their websites or applications. Simply put, a payment gateway API allows for a seamless integration with the solution your business uses to process payments.

What can a payment processing API do? 

The functionalities of a payment API may vary depending on its intended use but may include: 

• Initiating a transaction—Payment APIs may be used to issue or accept payments. In the case of accepting payments, the customer's payment details are securely transmitted to your server during a transaction. 
• Processing the transaction—The API validates the payment details with card networks and issuing banks before completing the transaction process. 
• Confirming the transaction—When the transaction is complete, the API will send a status update to your server, triggering your application to update its records and send a confirmation to the customer. 
• Ensuring secure transactions—The payments gateway API may utilize encryption and tokenization techniques to facilitate the secure transfer of sensitive payment information. 
• Making recurring payments—An API could automate recurring payments for a subscription, streaming platform, or other services.
• Making payouts—Payment APIs such as Onbe’s enable businesses to send funds to a consumer through various methods such as ACH, a virtual card or even a cross-border transaction. The API could also be used to refund customers following a transaction.
• Generating reports and analytics—Payment APIs could provide useful data, including information about failed transactions, disputes, and consumer payment choices. These insights can help you continue to fine-tune your payment processes and offer the best possible customer experience. 

What payment methods does a payment gateway API support? 

Payment methods supported by a payment API depend on the solution but may include a wide range of digital and electronic methods: 

• Credit and debit cards 
• Physical and virtual prepaid cards 
• Digital wallets, such as Apple Pay and Google Pay 
• Payment Apps, such as PayPal and Venmo 
• ACH 
• International bank account transfers
• And more 

Learn more about Onbe's payment choices. 

What are the benefits of a payment API? 

Implementing a payment API can offer numerous benefits for businesses across a variety of industries. Some of the key advantages may include: 

• A more sophisticated offering. Integrating with third-party payment APIs can provide more advanced payment features and a better experience than what businesses outside of the payments industry likely have the resources to develop in-house. You’re likely to get a superior product at a greater value by using a payment API—and you’ll save time and budget to devote to your core business activities. 
• Robust security. Payment fraud is a growing concern, with 80% of organizations reporting fraud attacks or attempts in 2023. Payment APIs typically include built-in security features such as tokenization, encryption, and solutions for fraud detection and prevention. By leveraging these capabilities, businesses can ensure the security of sensitive payment data, protecting themselves and their customers from potential fraud or data breaches. 
• Improved scalability. Unlike many in-house legacy payment operations, payment APIs will usually accommodate growing transaction volumes without a hitch. Whether you need to process hundreds or millions of transactions, you’ll be ready to scale seamlessly—so you can grow your payment programs and your business without compromising performance or reliability. 
• Global reach. Making or receiving international payments can be a costly and complex undertaking. An API that supports multiple currencies and modalities could help simplify the cross-border payment process, allowing businesses to transact with customers, workers and other stakeholders around the world.  
• Customization and flexibility. Payment APIs can often be customized to fit your brand and payment needs, so you can design the payment experience that’s perfect for your business and customers. Examples of ways you could customize a payment API include tailoring the checkout page, choosing what payment options to make available to your customers, and integrating with other systems and solutions, such as your accounting software. A flexible payment system can help streamline your processes, saving time and labor and reducing errors.
• Real-time reporting and analytics. Visibility is critical to the success of your payment programs, and payment APIs often make it easier to extract insights with a variety of reporting and analytics features. Businesses can leverage these insights to understand customer behavior, revenue trends, and more; optimize their payment strategies; and identify growth opportunities. 
• Compliance and regulatory support. Adhering to regulatory standards, such as PCI compliance, is one of the most complex parts of implementing a payment solution. By using a compliant payment API and working with an expert partner, businesses can mitigate risk and attain peace of mind. 
• Faster time to market. Leveraging pre-built payment APIs from payment service providers (PSPs) or fintech companies leads to accelerated development timelines, helping businesses implement engaging and innovative payment programs faster.   

Besides online payment APIs, what integration options are available for payment gateways? 

Payment gateways may offer several different integration options besides APIs to accommodate the needs and technical capabilities of various businesses. Some common integration options include: 

• Hosted payment page: With this option, customers are directed to a secure payment page hosted by the payment gateway provider. This option is quick to implement and requires less technical expertise than more complex integrations. Some solutions even let businesses create individual payment links to send to customers for one-time payments.  
• Mobile SDKs: Payment gateways may provide software development kits (SDKs) for mobile platforms, such as iOS or Android, to enable in-app payments. These SDKs typically include pre-built components and libraries that developers can integrate with their existing mobile apps. 
• Batch Processing: Some payment gateways offer batch processing capabilities, which allow businesses to submit multiple transactions for processing in a single batch. For businesses that need to process large volumes of transactions efficiently, such as at the end of a billing or payroll cycle, this option may be particularly useful.  

While direct payment API integration may require more technical resources and expertise from the business, the result is often a more seamless customer journey. Direct integration may also offer more flexibility and customization options. Learn more about how integrated and embedded payments create smoother experiences. 

How can ISVs and MSPs monetize third-party payment gateway APIs? 

Independent Software Vendors (ISVs) and Managed Service Providers (MSPs) can partner with payments gateway providers to add value for their clients and drive revenue in some of the following ways: 

• White-label solutions: ISVs and MSPs can white-label integrated payment solutions for resale, enabling them to generate revenue without investing in developing a solution in-house. 
• Revenue-sharing agreements: By entering revenue-sharing agreements with payment gateway providers, ISVs and MSPs can earn a percentage of the transaction fees generated through the third-party solution. This model incentivizes collaboration to drive transaction volume, leading to revenue for both the payment gateway provider and ISV or MSP partner. 
• Consulting services: Many businesses prefer to consult a trusted partner to choose a payment solution that fits their needs. ISVs and MSPs can provide advisory services to help businesses select a third-party payment gateway, optimize their payment processing workflows, and even provide the technical services required when integrating applications and APIs. 
• Bundling: ISVs and MSPs can resell third-party payment gateway solutions along with other services to differentiate their offerings.  

Choosing the best payment gateway API for your business 

Identifying the payment API that fits your business needs will depend on many factors, including whether you need to make or accept payments, which features and capabilities you are looking for, what payment modalities you wish to support, and your budgetary concerns.  

If you are in the market for a disbursement solution, learn more about Onbe’s flexible payment gateway API. We provide engaging, custom-branded experiences, in-demand payment choices and end-to-end program management to reduce the risk and complexity of making disbursements at scale—while helping our businesses and partners unlock new revenue streams. Contact us for a demo!