The Value of Payment Gateway API Integrations

Digital payments dominate commerce, both in-person and online, with the global digital payment market set to increase from $8.97 trillion in 2023 to $28.16 trillion in 2032. 

And payment gateway APIs are a huge factor in making this growth happen. 

In our Payment Gateway APIs Explained blog, we broke down what this technology is and how it works. 

To briefly recap, a payment gateway API allows you to accept, process, and authorize online transactions directly from your merchant storefront or marketplace. When a payment is initiated, an API request is sent to a payment processor via your chosen payment gateway to either approve or deny the transaction.  

These are the basics on what a payment gateway API is and how it functions, but another important aspect is understanding what different API providers have to offer your business. Even more crucial is acknowledging the essential role these APIs play in your payment setup. 

That’s what we’re here to discuss today. 

What Does a Payment Gateway API Integration Entail? 

Integrating a payment gateway API depends on the provider you choose. Every API is built differently according to the provider’s approach to payments, so it is wise to explore your options and choose the solution and integration that best suits your business needs. 

Despite the potential differences, most integrations include similar start points: 

API documentation and credentials

Your developers will start by reviewing the provider’s API documentation, which typically outlines endpoints, URLS, authentication methods, request bodies, response parameters, and error states. Obtaining API credentials requires creating an account with the provider, which often also gives you access to API keys and tokens for securing payment data during a transaction. 

Using our own Spreedly API as an example, authenticating the API requires an environment key and an access secret. Only with these credentials can you access and use the API. You can create your Spreedly API credentials via our merchant portal. The environment key comes first, after which you can generate an access secret within the environment to complete the authentication process. 

Sandbox gateways

Before implementing the API in a live environment, your developers (or your provider, if you opt for a payment partner that offers development solutions) set up a testing or sandbox environment where you can simulate transactions, test various payment scenarios, and debug any potential issues. 

Sandbox gateways can also be used for testing more complex integrations necessary for security and compliance, such as 3D Secure. Each sandbox gateway should be given its own environment. Real payment data should never be used in your sandboxes. 

After testing in your sandbox environments, you can then move on to creating your production gateways used for processing real transactions. 

Features to Look for in Your API Solutions

To reiterate, not all payment gateway APIs are created equal. 

Comparing different APIs and their providers can help you choose a solution that matches your payment needs and business requirements. Each payment gateway API will offer differing features and capabilities according to what kinds of solutions the provider has to offer. Some APIs can even be paired with others, giving you a more diverse payment setup with a broader set of functions. 

Some factors may seem obvious, like choosing a provider with a strong reputation and excellent reviews from businesses in similar sectors to your own. Likewise, your provider of choice should be knowledgeable not just about gateways but payment and financial technology as a whole. Forward-thinking providers that focus on future-oriented technologies can be your ticket to staying ahead. 

From a more technical standpoint, it’s in your best interest to look for:

• Clear and comprehensive documentation 
• Dynamic testing environments that can support sandbox gateways
• Customizable configurations that you can tailor to your specific needs
• Modern security features, such as tokenization 
• Support for many types of payment methods and channels beyond credit card payments alone, such as digital wallets and localized payment rails

Additionally, you need a payment gateway API that can connect you to a larger infrastructure capable of exceptional scalability. Interoperability is particularly important, as you want an API that does not limit you to working with a single provider or processor. 

Looking at the Spreedly API as an example once again, our API offers far more than payment gateway integrations alone. Just a few of the many other functions of our solution include:

• Support for payment method distribution receivers
• Composer, a workflow service that allows custom gateway routing based on the workflow invoked
• Automatic card request parameters that retain payment data after a successful verification 

Why Payment Gateway APIs Matter 

A payment gateway API is comprised of two parts, a payment gateway and an API. 

The gateway facilitates communication between customers and their banks, while the API enables seamless communication between the gateway and payment processor with your online interface. 

Functionally, this type of API is the piece of web code needed to connect your storefront, app, or marketplace to a payment network. It enables your payment processing solution to connect directly with your checkout interface, offering customers a smooth transactional experience. 

On the back-end, payment gateway APIs are responsible for connecting your customer to their bank to authorize a payment quickly. Your choice of API can have a tremendous impact on the overall customer experience, as it can influence your payment acceptance and success rates. 

Security is another major benefit of a payment gateway API. Through tools like tokenization, encryption, and in Spreedly’s case, advanced vaulting, these APIs help to protect sensitive financial data and uphold your compliance with relevant regulations. A secure API reduces your risk of a data breach and can protect your revenue against issues like chargebacks and false declines.  

Payment gateway APIs also support business growth by facilitating multi-currency transactions, giving you the option to expand your operations into global regions and territories with much greater simplicity. The right API can even offer payment process authorization, allowing you to reduce the manual effort necessary when accepting and completing transactions.  

Do You Need a Payment Gateway API to Accept Payments?

Any business accepting online transactions must have a payment gateway and a payment processor, but are APIs really necessary? 

The short answer is, yes. 

Accepting payments without using an API would require you to develop payment processing capabilities in-house, and even then, you would still likely need to build your own API to integrate your home-built payment products seamlessly. Given the broad availability of payment service providers offering gateway solutions, choosing this route would impose an avoidable burden on your development teams. 

For argument’s sake, however, let’s say you do decide to forego a pre-built API in favor of creating your solution in-house. What would that process entail? 

You have a few options, none of which are simple or fast to get started. 

Becoming a payment processor necessitates becoming an independent sales organization (ISO) or a member service provider (MSP). ISOs and MSPs are two terms commonly used interchangeably that refer to a company that maintains a relationship with card networks and acts as an intermediary between a business and relevant third parties, like credit card companies or acquiring banks.  

However, for your business to remain profitable and not overburdened by the costs of becoming an ISO/MSP, you would need to offer payment processing services to other companies as well. If processing for other businesses doesn’t interest you, then opting for this would prove highly cost-inefficient. 

For businesses that only want to accept in-person cash payments, you can probably get away without a payment gateway API, but for anyone hoping to take advantage of all the opportunities of the Internet, you need APIs to offer your customers a satisfactory payment experience. 

What If You Want to Use Multiple Payment Gateways?

Integrating more than one payment gateway requires an API that can offer this type of support. 

The multi-gateway approach offers your business exceptional operational flexibility. Every gateway has varying degrees of usefulness based on factors like geographic location, integration features, and cost-efficiency. Adopting a multi-gateway strategy can help you build a payment system that can adapt to the specifics of each transaction to maximize your success and revenue. 

Implementing multiple gateways with a single API allows you to route transactions through the most cost-effective or reliable provider for any given situation. For example, one gateway may offer lower fees for domestic transactions, while another may be better for cross-border payments due to favorable currency conversion rates or higher success rates in a specific location.

It’s also necessary to consider the role of redundancy in your payment system. If one payment gateway experiences downtime or technical issues, having an API that can swiftly connect you to an alternative makes sure your transactions are processed successfully and your customers do not experience disruptions during checkout. Such benefits are especially important for high-volume merchants.

To successfully implement a multi-gateway approach, you need a well-structured payment orchestration layer built specifically for API connectivity. With such technologies in place, you can intelligently route payments while also meeting the various compliance standards across different regions and providers. While this adds complexity to the integration process, the benefits of flexibility, reliability, and cost optimization make it a worthwhile investment for businesses looking to scale globally.

When Do You Need to Use a Payment Gateway API?

If you’re smart about it, always. 

Payment gateway APIs are the key to true efficiency for both you and your customers. Rather than thinking of it as a nice-to-have, you need to frame APIs as a non-negotiable in your payment setup. 

Without an API, your customers would need to interact with you directly, either in person or over the phone, to initiate a payment. This outdated process is not only time-consuming but can also discourage customers from engaging with your business beyond one-time transactions, making it nearly impossible to onboard new users for subscription-style products and services. 

Beyond convenience, a payment gateway API enables automation, allowing your business to scale its operations without increasing manual workload. With the Spreedly API, for instance, you can gain the tools you need for recurring billing, seamless checkouts, and integrations with as many third-party providers as you need from Spreedly’s many supported connections.  

Handling payments manually increases the risk of fraud and data breaches. A payment gateway API helps you not only meet PCI DSS compliance but also reduce your overall liability by connecting you to a more comprehensive environment built for merchants and marketplaces to thrive. 

Make Your API Integrations Simpler with Spreedly

The Spreedly API offers everything you need for exceptional payment processing. 

Through our API, you can connect to an open payments platform designed for the complex needs of growing merchants and marketplaces. Built using a cloud-native architecture, Spreedly’s API and platform give you the utmost connectivity and payment gateway flexibility. Our solutions are developer-friendly, meaning you can tailor our services according to your geographic and operational needs.

On top of our API features, Spreedly also offers leading security capabilities. We offer tokenization to keep payment data safe throughout transactions and advanced vaulting to store that data safely when not in use. Plus, Spreedly offers far more than an API integration alone. Through solutions like Recover and Composer, you can streamline your payment workflows and protect your transactions from declines, helping to increase your revenue to the max and eliminate unnecessary disruptions. 

Get in touch with Spreedly today to get started.

Already a Spreedly merchant? Check out our API documentation for more integration information.

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