APIs: Creating better customer payment experiences
We live in a digital world that is more connected than ever before. We can post news, poke our friends virtually or purchase goods in an instant with all the tools available at our fingertips. However, have you ever wondered how it all works?
How does data get from one website to another, allowing us to book that Airbnb in another country in your own local currency? How do apps or websites let you create an account and log in using your Google or Facebook credentials?
The answer to this is that these websites/apps ‘talk’ to other systems to get data or to verify your credentials. And the way that these systems communicate to each other is through something called an application programming interface, also known as API. APIs are the engine under the proverbial hood – making today’s digital economy work smoothly.
What is it and how it works?
Simply put, an API is an easy way for one system to speak with another to request or share information and exchange data.
As an example, let us say you want to apply for a passport. You cannot just go to the printers and make yourself a passport. Instead, there are procedures you need to follow, which include going to the Immigration Department and liaising with an officer at the counter. Your information is collected (eg forms you filled in, picture taken, thumbprint registered), you pay the fee and wait for your passport to be done.
You have no idea what goes on behind the scenes, the system took your input, compiles, digitises and processes the information and once it is done, it produces your passport which is then given to you.
This is exactly how an API works. The passport production process is comparable to the system we want to communicate with. We cannot access the internals of the system and we can only talk to the API layer – which, in this case, is the officer at the Immigration Department. This is known as an “end point”, a point of contact for us to submit our input.
With each end point, there is a protocol about what input is required and what result you will get in return. If you do not supply the right input, then your request will get rejected.
Now imagine that different systems will each have their own APIs with different end points and different protocols for each end point about what inputs are required. Your app or website can interact will all these different systems through their respective APIs.
Why API is key for a good customer payment experience
Nowadays, if you are an entrepreneur who is building a business online, you are not limited by distance. With the power of the Internet, you could be based in Australia and have someone from India order a product from you. When this occurs, your customer can view your product in their local currency with all the conversions done automatically.
This is where an API comes into play. The API works behind the scenes, converting your prices to display the information to your customer wherever they are around the world in US dollars, euros, rupees or ringgit, for instance.
If you do not have an API, you would have to build the underlying infrastructure yourself. This would involve establishing multiple banking relationships and the headache of meeting compliance and regulatory requirements wherever you are receiving money.
This would be time consuming and can lead to a disjointed experience for your customers, leading to first-time buyers losing trust in your brand and service. Potential customers are more likely to complete a sale if they are presented with their preferred currency, payment method and language.
Other advantages of integrating APIs to your app or website include:
- Greater return on investment
Integrating a conversion rate API or validation API could revolutionise your payment process by providing real-time insights into exchange fees and validating payments. Leveraging key payment APIs will help to reduce failed payment rates, help build trust by offering greater foreign-exchange transparency and allow you to offer your international customers more competitive foreign-exchange rates.
- Significantly reduce cart abandonment
Currency APIs – more specifically, a multi-currency API – not only reduces the rate of shopping cart abandonment, but can also minimise refund and chargeback rates. For currencies that you don’t have local pricings for, the prices can be displayed to customers using real-time foreign-exchange rates. Your customers won’t have to shift from your page and open a currency converter on Google to figure out how much it costs in their local currency – and for that, they will be grateful.
- No need to hold separate bank accounts for each currency
Business can carry out all of the usual transactions they would with a regular bank account such as sending money, making withdrawals, paying employees and receiving deposits – but in different currencies.
- Ensuring customer loyalty
Using multi-currency APIs help the customer avoid being charged extra fees for currency exchange fees. When a customer sees these extra charges, they are less likely to want to go through with the transaction. So, having it will make them more likely to purchase from your site again.
There are plenty of APIs that are set up for this purpose and would be a great help especially, if you have a start-up or small business. Here are some of the popular payment APIs available in the market:
So, take some time to research the various APIs available before you make your decision. Keep in mind that the goal is to make your customers’ experience as uncomplicated as possible.