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Crafting the Ideal API Portfolio for Payment Companies in the Digital Age

April 26, 2023

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API Portfolio Considerations for Payments Companies

A payment company can position itself for success by crafting a robust API portfolio. This strategic move not only increases the adoption of its services, but also serves as a catalyst for revenue growth.

Digitalization and integration are not novel concepts in the business world. In fact, the demand for digital financial services has surged notably in recent times. As the usage of digital financial platforms continues to grow, users are increasingly seeking a more flawless experience with customizable features. They are now actively seeking alternatives to traditional brick-and-mortar payment solutions, while expressing a strong desire for an enhanced user experience. This shift in consumer demand, coupled with the economy’s transition into a more digital era, has underscored the necessity for a robust API (Application Programming Interfaces) portfolio.

While over half of developers dedicate their entire working hours to creating APIs, the market for API management is projected to grow by a CAGR of 25.1% between 2022 and 2027. This is especially in the financial industry. APIs offer a wide range of payment-related functionalities, including transaction processing, payment data management, and user identity verification, allowing developers to integrate payment processing capabilities into their applications. The result? A linear expansion of the customer base. However, it’s crucial to emphasize that this growth should not lead to the development of an unplanned API portfolio.

Strengthening Your API Portfolio: Understanding the Diverse Range of APIs Required

Building a robust API portfolio necessitates the inclusion of various types of APIs, each with its unique strengths and limitations. Payment companies must carefully curate a diverse collection of APIs based on their present needs and future aspirations. Furthermore, as digital financial platforms continue to expand their service offerings, organizations will find themselves needing different APIs to support these evolving functionalities.

For instance, RESTful APIs excel in web-based applications, facilitating the efficient retrieval and manipulation of data over the Internet. On the other hand, Soap APIs, designed for structured data exchange between applications, are more commonly employed in enterprise-level systems. GraphQL APIs also play a crucial role, optimizing data query processes by consolidating requests from multiple sources into a single transaction, ultimately enhancing the performance of payment companies.

Currently, a whopping 74.4% of API developers are engaged in developing APIs for internal purposes, while 44.2% are focused on integrating with business partners, and 49% are developing APIs for external or third-party operations. Although there is a gradual decline in the number of developers working on internal APIs, there is a consistent rise in the development of partner-facing and external APIs, growing at rates of 27.7% and 4.3%, respectively. However, when designing a comprehensive API portfolio, it is crucial to avoid the redundancy of similar APIs. Instead, organizations should prioritize addressing distinct functionalities with unique APIs.

The Optimal Number of APIs

An ideal API portfolio is comprised of a wide array of APIs designed to seamlessly integrate various payment functionalities into applications. This trend has positioned the API market as one of the largest and more resilient even in the face of looming economic downturns. Impressively, 89% of industry experts have consistently expressed their commitment to API investments.

The guiding principle here is to begin with a modest selection of APIs and gradually expand the portfolio as the need arises. However, it’s essential to exercise caution and avoid an excessive number of APIs, as this can hinder API efficiency. A surplus of APIs in a portfolio can also result in wasteful spending that could have been avoided. Organizations should remain watchful in retiring APIs that have become outmoded or are no longer applicable, as they can be considered a form of technical debt.

API Insights: Their Crucial Role in Payment Services

Gaining insights into API usage can significantly impact payment companies. These insights enable a deeper understanding of how APIs are used, pinpoint areas for improvement, and inform decisions regarding future development. Moreover, insights play a pivotal role in making data-driven decisions by unveiling patterns such as API adoption rates, usage frequency, prominent end-user behaviours, and preferences. This understanding is vital as an increasing number of customers seek all-in-one digital financial service solutions tailored to their diverse needs.

A striking 83% of companies acknowledge the critical role of APIs in shaping their strategies and overall business. Notably, major banks are actively rolling out API programs, earmarking an average of approximately 14% of their IT budget to these endeavours. Emphasizing the importance of insights can empower payment companies to deliver high-quality APIs that satisfy end-user needs, while also driving revenue and overall growth. Furthermore, these insights will enable companies to create customized solutions based on user behaviour patterns.

API Governance: A Necessity for Your API Portfolio

Every user of a payment app seeks not only seamless transactions, but also the assurance of safety and security. Records indicate that as the API traffic per customer surges, malicious traffic also increases, resulting in an alarming attack rate of 2.1%. API portfolio governance serves as a company’s defence against such cybercrimes. It is an essential tool for developing and deploying APIs in strict compliance with regulatory requirements and industry standards. Prioritizing governance during the development of an API portfolio empowers payment companies to ensure security, compliance, and alignment with organizational goals.

Striking the Right Balance

The importance of maintaining a comprehensive API portfolio is evident, and payment companies cannot afford to ignore it. User expectations for digital payment solutions are on the rise, with a growing demand for all-in-one solutions that can cater to their diverse financial needs, while offering customization options. Achieving the right mix within the API portfolio is the solution. Companies should make every effort to integrate all valuable APIs into their portfolio, as the contradictory approach can have negative consequences.

It’s also crucial to avoid straining the API portfolio with a disproportionate number of APIs. Having more APIs than one can manage will have severe consequences and make it challenging to continually refine and elevate the APIs.

If you require assistance in building an all-inclusive API portfolio for your payment company, do not hesitate to contact our team today.

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