5 top payment APIs for UK businesses

Estimated to close at $371 billion in 2024, the digital payments market in the UK is likely to grow at a staggering CAGR of 20.46% to cross the $942 billion mark by 2029.

Offering secure and efficient payment options is crucial as businesses navigate a rapidly changing digital landscape. Payment APIs have emerged as a transformative technology, empowering companies to enhance their payment practices, meet customer preferences, and expand their global reach. These payment APIs serve as powerful tools that drive growth, enhance user experiences, and simplify operational challenges.

This detailed guide explores various facets of payment APIs, covering their various types, advantages, integration methods, and the top service providers in the UK.

What is a payment API?

A payment API (Application Programming Interface) is a software intermediary that allows organisations to include transaction facilities into their programs, websites, or platforms. Instead of building a payment module from scratch, developers can use APIs to integrate with external payment networks, securely manage transactions, and ensure a hassle-free payment experience for customers. Instead of building a payment module from scratch, developers can utilise payment gateway APIs to integrate with other payment frameworks, securely manage transactions, and enhance the payment experience for clients.

Essential features of payment APIs:

Connectivity

Payment Application Programming Interfaces (APIs) facilitate the connection between merchants and financial networks, including banks, card networks, and payment providers. For instance, when a consumer initiates a transaction, the payment API engages in secure communication with all pertinent parties to authenticate and finalise the payment. This integrated system obviates the need for manual intervention, thereby facilitating expedited and error-free transactions.

Customisation potential

Businesses can customise payment APIs to align with their particular needs and specifications. For example, an online retailer may implement a payment API to facilitate various payment options, including credit cards, digital wallets, and direct debits, while ensuring that the transaction experience is consistent with the brand's aesthetic and identity.

Safety and protection

Most payment APIs inherently incorporate robust security protocols, such as encryption and tokenisation. These features guarantee the security of sensitive payment information throughout the transmission process, thereby mitigating the risks of fraud and data breaches. Adherence to standards such as the Payment Card Industry Data Security Standard (PCI DSS) significantly bolsters trust.

International outreach

The global reach of payment APIs often helps in multi-currency transactions, addressing a key requirement of enterprises with an international clientele. A business located in the United Kingdom is capable of accepting payments in United States Dollars (USD), Euros (EUR), or Japanese Yen (JPY) without the necessity for supplementary infrastructure, thereby expanding its customer base.

How does a payment gateway API work?

The payment gateway API serves as a technology bridge between businesses and the financial mechanisms required to execute payments. It facilitates transactions by securely communicating payment information from the customer to the merchant's bank and back.

Detailed process overview: initiating payment

Once the customer initiates a payment, the payment API gathers payment information (such as card number, CVV, or bank details) via a secure interface. This procedure guarantees the encryption of confidential data before its transmission.

Data encryption and transmission

The payment API encrypts the collected payment data before transmitting it to the payment gateway, preventing unauthorised parties from accessing the information.

Request for authorisation

The payment gateway API interacts with the customer's bank or card issuer to verify the payment. This involves the verification of funds, assessment of card validity, and detection of potential fraudulent activities.

Transaction approval or rejection

The payment API communicates the transaction status to the business based on the authorisation response, indicating whether it has been approved, declined, or necessitates further authentication.

Funds settlement

Once approved, the payment API processes the transaction and transfers the funds to the merchant's account. The duration of this step may vary from a few seconds to several days, contingent upon the chosen payment method.

What are the different types of payment APIs?

There is a wide variety of payment APIs available, each designed to fulfil unique transactional and business demands. If you want to improve operational efficiency, consumer experience, and security, you must choose the proper type. To assist you in making a well-informed decision, we will go over the main categories of payment APIs, their features, advantages, and applications below.

Credit card payment APIs

These payment APIs facilitate businesses in accepting credit card payments on the web, via applications, or at retail POS systems. They provide the secure management of sensitive cardholder information using mechanisms such as tokenisation, which substitutes card details with encrypted tokens. Advanced credit card payment APIs typically include features such as recurring invoicing, fraud detection with 3D Secure verification, and chargeback management. Organisations gain advantages from optimised operations and increased consumer confidence through stringent adherence to PCI DSS requirements.

Stripe and Visa Cybersource APIs make it easy for business apps to connect with each other. This lets developers add features like saving cards for repeat customers and supporting multiple currencies for international transactions. These qualities are essential for e-commerce companies aiming for worldwide expansion.

Digital wallet payment APIs

Payment APIs for digital wallets allow companies to incorporate payment mechanisms such as Apple Pay, Google Pay, and Samsung Pay. They provide quick and safe checkout, utilising biometric authentication (such as Face ID or Touch ID) to increase security. Businesses that focus on mobile devices or target younger consumers who favour contactless payments may especially benefit from this.

These APIs facilitate web payments, in-app purchases, and even mobile POS transactions in addition to being convenient. Additionally, companies can incorporate loyalty programs that allow consumers to directly earn and spend incentives using digital wallets. Digital wallet payment APIs are essential for contemporary retail and service-based sectors because of their simultaneous emphasis on functionality and client involvement.​

Recurring billing and subscription payment APIs

Specifically designed for subscription-based businesses, these payment APIs automate billing cycles and manage the subscription lifecycle, including upgrades, downgrades, and cancellations. They streamline the management of intricate models like tiered pricing or discounts, thereby minimising administrative challenges. Stripe Billing API and Chargebee exemplify robust solutions, providing functionalities such as retry logic for unsuccessful payments and effective customer communication for updating payment information.

Furthermore, recurring billing APIs come with features for dunning management, which helps to minimise revenue loss by effectively recovering failed payments. These are especially beneficial for SaaS companies, fitness centres, and subscription box services, where ensuring a steady cash flow is essential.

Open banking API for payment

With consent, Open Banking API payments allow third-party providers to access client banking data, enabling businesses to offer personalised financial products. These payment APIs link directly to banks, letting businesses improve consumer experiences with transaction histories, account balances, and spending patterns. Innovations in payments, lending, and personal finance management require secure and regulated access.

The primary advantages of Open Banking payment APIs include lower transaction fees by bypassing conventional payment networks and facilitating direct bank transfers. Open Banking payment APIs provide consumers with increased control over their financial data and transactions, thereby fostering transparency. Organisations can utilise this data to develop customised offerings such as loans or budgeting tools, enhancing customer engagement and operational efficiency. Open Banking is transforming the financial landscape by providing secure, efficient, and customer-focused solutions.

Operators like Wonderful and GoCardless are at the forefront of this revolution.

Fraud prevention and risk management APIs

Businesses use these payment APIs to protect their payment processes and reduce financial risks. These API payments identify and mitigate hazards using machine learning and real-time analytics. Organisations may quickly approve, refuse, or flag purchases for further consideration by assigning risk scores to transactions. By protecting sensitive data with encryption, tokenisation, and fraud detection, payment gateways improve the payment ecosystem. Sift and Riskified provide predictive insights, chargeback management alternatives, and personalised rules to address unique risk circumstances, ensuring effective protection and a great customer experience.

Fraud prevention and risk management payment APIs also help comply with GDPR and PCI DSS to protect data. High-risk sectors benefit from real-time scoring, device fingerprinting, and fraud trend analysis to reduce revenue loss. Businesses gain client trust and lower operational expenses by automating fraud detection and dispute resolution. Fraud Prevention payment APIs provide business continuity and security in a digital age against increasingly sophisticated cyber threats.

What is a real-time payment API?

Real-time payment APIs facilitate instantaneous fund transfers, enabling swifter transactions relative to conventional banking processes. Utilising sophisticated protocols such as the UK’s Faster Payments Scheme or ISO 20022, these payment gateway APIs facilitate instantaneous settlement for enterprises in many sectors, including e-commerce and the gig economy. They enable businesses to sustain cash flow, expedite payments, and improve customer satisfaction by providing quick payments, refunds, and transfers.

Essential features of real-time payment API

Instantaneous transactions: Real-time payment APIs facilitate immediate fund transfers and settlements, effectively minimising the delays typically linked with conventional payment methods. This allows businesses to function effectively, especially in sectors with high demand, such as gig work and online retail.

Payment tracking transparency: These payments API deliver real-time updates on transaction statuses, effectively reducing errors and disputes. Wonderful’s payment gateway API integration improves trust through transparent communication and real-time payment tracking for businesses.

Better cash flow control: When businesses use real-time API payments to accept instant payments, they can keep a closer eye on their cash flow and make sure they have enough funds for regular operations or possible investments in growth.

Which is the best payment API?

As the internet payment business expands, new players are regularly entering the payment API market, while established companies are augmenting their offerings to stay competitive. Finding the best payment API is a challenging task due to the number of options available. Consider the following points to make an informed decision:

Simplified integration

Seek payment API integration that offers thorough documentation and robust developer tools to facilitate seamless integration. A sandbox environment for testing is an advantageous addition.

Security features

Focus on API for payments that provide strong encryption, tokenisation, and adherence to standards such as PCI DSS. This guarantees the safeguarding of confidential customer information.

Scalability

Select payment APIs capable of managing higher transaction volumes as your business expands. For example, Stripe is well-known for its capability to assist rapidly expanding enterprises.

Multi-currency support

For global operations, choose API payments that enable multi-currency transactions seamlessly and efficiently.

Cost framework

Examine the pricing structure of the payments API, including whether it imposes charges on a per-transaction basis, monthly fees, or a hybrid approach. Assess whether it is consistent with your financial plan.

What is the role of the payments API in facilitating cross-country transactions?

Globalisation has opened the doors for many local businesses to expand beyond borders. This also means that payment APIs need to have features that complement international commerce. API for payment can augment cross-border business dealings in the following ways:

Currency conversion:

Payment APIs often have built-in currency conversion tools that let businesses accept payments in more than one currency while still ensuring accurate and real-time exchange rates. This facilitates the process of international transactions for both merchants and consumers.

Local payment methods:

Application Programming Interfaces (APIs) facilitate the integration of region-specific payment options, such as the Unified Payments Interface (UPI) in India and iDEAL in the Netherlands. This alignment with a familiar framework enhances consumer trust and convenience.

Regulatory compliance:

API payments facilitate compliance with regional requirements such as GDPR, PSD2, and AML by overseeing data encryption, consent management, and transaction monitoring. This guarantees secure and compliant operations internationally.

Multi-country expansion opportunity:

Payment APIs provide scalability capabilities, enabling organisations to swiftly include additional nations and currencies without necessitating intricate modifications to their existing structure.

Organisations such as GoCardless, Plaid, Adyen, etc. are emerging as strong Stripe alternatives that support international transactions, thus broadening the horizons of global commerce.

Top payment API providers in the UK

Wonderful

Wonderful provides a highly flexible payment API that integrates effortlessly with multiple payment networks, such as pay by link, offering businesses an adaptable solution for managing commercial transactions. The platform’s payment API integration allows businesses to effortlessly accept payments through direct bank transfers powered by open banking. You can also generate QR codes and share them with your customers for a hassle-free payment experience.

Their payment API prioritises instant settlements and a simplified checkout process. The platform also emphasises secure, encrypted transactions to protect business owners and customers.

Wonderful's flexibility and scalability allow firms in e-commerce, retail, charitable, and subscription-based sectors to personalise their payment experience. With just £19.99 for 2000 monthly transactions, Wonderful’s payment gateway API offers an attractive pricing model with zero processing fee, suitable for businesses of all sizes.

Robust installation documentation and support make Wonderful a ready choice for organisations with limited technical expertise.

Adyen

Adyen is one of the most renowned online payment gateways, delivering a complete API for payment solutions for enterprises aiming to accept web-based and in-store transactions. Recognised for its robust fraud prevention tools and extensive global transaction capabilities, Adyen supports over 250 payment methods across 200+ countries. The payment API integration enables organisations to oversee transactions across various channels and currencies, streamlining financial operations and enhancing customer experiences. Adyen's scalability, flexibility, and security position it as a prime option for international enterprises, especially in the retail, travel, and digital goods industries.

Stax payments

A sophisticated payment API from Stax Payments (previously Fattmerchant) offers organisations transparent and flexible payment solutions. Stax's subscription-based pricing strategy eliminates per-transaction expenses, saving businesses money. It accepts credit, ACH, and mobile wallet payments. Businesses may track payments, cash flow, and optimise financial operations using Stax's extensive reporting and simple integration with business accounting software. Businesses seeking an efficient and cost-effective payment solution choose it for its easy integration and devoted customer service.

Plaid

Plaid, a major financial technology company, provides payment APIs to link apps to bank accounts. Companies can securely access financial data for identity verification and transactions with Plaid's products. Its API lets businesses add direct debits, fraud protection, and faster transactions. Plaid's ability to communicate with over 11,000 financial institutions provides a wealth of banking data to improve payments, lending, and personal finance. Plaid is ideal for fintech startups and companies offering tailored financial products based on user data.

Worldpay

Now integrated with Vantiv, Worldpay stands as one of the UK's leading payment service providers, delivering comprehensive API solutions tailored for businesses of varying scales. Worldpay’s payment APIs enable businesses to accept various payment methods, such as credit and debit cards, mobile wallets, and e-checks. Worldpay offers comprehensive fraud protection tools and secure payment procedure features, making it a solid option for businesses seeking a dependable and secure solution.

Conclusion

Payment APIs serve as the foundation of contemporary commerce, transforming the financial interactions between businesses and customers. These payment gateway APIs equip businesses with essential tools to excel in a dynamic digital economy, facilitating smooth cross-border transactions, enabling real-time payments, and simplifying regulatory compliance. Integrating robust payment APIs allows organisations to improve operational efficiency, provide outstanding customer experiences, and open up new market opportunities.

As businesses increasingly pursue secure, scalable, and innovative payment solutions, payment APIs emerge as a crucial link to ensure their financial operations remain robust in a competitive global marketplace.

FAQs

What payment API should I use?

Business needs, transaction volume, and target audience determine payment API choice. Payment gateway APIs like Stripe offer worldwide scalability and several payment options for e-commerce firms. Consider Plaid or Wonderful for real-time bank transfers or open-banking facilities. Before making the final choice, consider integration, security, and cost.

What are the benefits of using the payments API?

Payment APIs integrate transaction features into websites and apps, simplifying transactions. Faster checkouts and support for cards, bank transfers, and mobile wallets improve the consumer experience. Payment gateway APIs provide operational efficiency and scalability with strong security, real-time updates, and customisation.

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