Payment API: what it is, how it works and how it helps to scale business in LATAM

Every day customers are looking for a fast, simple and secure payment experience and the duty of companies is to have tools that offer all these possibilities. The payment API is one of them and here we explain how it works and the benefits it provides.

What is a payment API?

An Application Programming Interface (API) is a software tool that allows different payment options to be integrated directly into a company's applications, websites and other digital platforms, without the need to redirect users to external platforms.

In other words, the API acts as a bridge between your system and payment processors (such as Visa or Mastercard credit cards, bank transfers, Apple Pay, Google Pay, among others). The API transmits transaction data, handles authorizations and confirms payments in seconds, improving the user experience and reducing friction at checkout.

How is a paid API different from other similar concepts?

Sometimes payment API is often confused with other terms such as payment gateway and payment platform, but they are not the same.

Payment API vs. payment gateway

A payment gateway is the infrastructure that connects to payment methods, while the payment API allows you to integrate that infrastructure into your system. Today, all modern gateways offer one or more APIs for businesses to integrate with their services and offer different payment solutions. 

Payment API vs. payment platform

The payment platform is the complete service that includes payment processing, support, control panel, reconciliation, among others. The API is the technical component used to connect your system with that platform.

Why are payment APIs important?

With the growth of e-commerce, on-demand services and mobile apps, businesses need flexible, automated and scalable solutions to process payments. A payment API allows you to:

• Integrate frictionless payments into your user experience.
• Offer multiple means of payment from a single point.
• Automate flows such as recurring collections, validations or retries.
• Scale your operation in multiple countries or currencies without redoing your backend.

What is a payment API for?

A payment API is used to connect your app, website or system with services that process transactions, such as banks, card networks, digital wallets or payment gateways. Its purpose is to automate, protect and streamline the entire payment flow without the user having to leave your digital environment.

In addition, it prevents the business from having to handle sensitive data (such as card numbers), thanks to technologies such as tokenization, which protects the information throughout the process.

How does a payment API work, step by step?

The flow of a typical transaction through a payment API includes these 6 steps:

1. Start of the purchase process

The customer initiates the purchase and enters his card or digital wallet data. This step is done securely through a personalized payment link or SDK, which are the forms enabled to capture sensitive information in compliance with PCI DSS standards.

2. Request for payment to API

Once the data is entered, the request is sent to the API. The API collects details such as amount, currency and payment method, without exposing sensitive information.

3. Secure data submission (authentication or tokenization to securely submit payment information)

The API encrypts the payment information and uses a token for added security. In this tokenization process, the customer's confidential data is replaced with a unique identifier (token) generated for the transaction to be performed. 

The API determines the routing of the transaction and the data is sent to the payment gateway, taking into account the customer's location, payment method and currency. 

4. Payment processing

At this stage, the API handles the currency conversion and exchange rates required, if any, in accordance with local regulations. The transaction request is forwarded by the payment gateway to the bank and the bank communicates with the card network or alternative payment provider to authorize or not the transaction.

5. API Response (client and backend confirmation )

The issuing bank notifies the acquiring bank and the acquiring bank communicates with the payment gateway. The payment API receives an alert, informs the company's system and the customer receives a message with the confirmation or error of the transaction.

6. Settlement and reconciliation with the bank account

If the transaction is approved, the funds are transferred to the company's account. The API will handle the settlement in the appropriate currency and send the reconciliation reports required by the company for its financials. 

What types of payment APIs are there?

Payment APIs can be classified according to how they handle information, the level of control they offer to the business, and the purpose they serve within the payment flow.

Knowing the different types of payment APIs helps you choose the most appropriate integration according to your technical needs, business model and desired degree of customization. Here are some of the most common API types:

According to the flow of information

APIs can be classified into direct and redirected, depending on how they handle the flow of information.

Direct API or server-to-server (Direct API)

The business owner has greater control, since he/she handles the sensitive data of the purchasing process. This represents a greater responsibility.

• Advantages: greater customization of the payment flow, smoother integration with the UI
• Disadvantages: the business must comply with regulations such as PCI DSS, since it processes sensitive data.
• Ideal for: digital platforms with technical equipment and advanced integration needs.

Redirect API or hosted payment page(Redirect API)

Sensitive data is handled by the payment gateway, which means that the business owner has less control and responsibility in the purchasing process. 

• Advantages: The supplier assumes responsibility for the handling of sensitive data.
• Disadvantages: less control over the user experience.
• Ideal for: businesses that prioritize speed of integration and uncomplicated compliance.

2. By their functions or the purpose they serve

Not all APIs serve the same functions and, depending on their purpose, they can be data APIs or functional APIs. 

Collection or functional API

These are APIs specifically designed to perform actions such as processing payments, managing refunds, setting up subscriptions or performing automatic retries.

Data API (CRM system)

It enables communication between CRM(Customer Relationship Management ) and other systems or applications. The goal is to exchange information, facilitate data integration, automate processes and provide a personalized experience without problems between different software.

What are the benefits of using a payment API in your business?

Integrating a payment API into your business is not only about implementing technology, but also about establishing a strategy that allows your company to scale, adapt and compete in an increasingly demanding digital environment.

Here are some of the benefits of using payment APIs in business:

• Automation and operational efficiency: Payment APIs allow automating critical processes such as collection, reconciliation and retries in the event of temporary failures. This reduces operational burden, human error and management time.

• Robust transaction security: Modern APIs include tokenization, encryption and compliance with regulations such as PCI DSS, which minimizes the risk of fraud and protects your customers' data.
• 3. Improve the customer experience: By integrating the checkout process directly into your app or site, the API allows you to offer a frictionless experience, which improves conversion, reduces cart abandonment and fosters loyalty.
• 4. Real-time data and full visibility: the company will receive real-time, uninterrupted information on the status of the payment. This ensures transparency during the process.
• 5. Local and international scalability: You can integrate multiple local and international payment methods (cards, wallets, transfers, etc.) and operate in different currencies and countries from a single API.

How to choose the best payment API for your business?

These are the key factors you should consider before choosing a robust payment API for your business:

Geographic scope of the company

Before choosing an API, evaluate if your company will operate only locally or if it plans to scale in Latin America or globally. Look for compatibility with local payment methods and national banks. Make sure the API has multi-currency support, local payment methods and regulatory compliance in each country.

Type of business

It is important to take into account whether they are e-commerce, B2B companies or if they are financial and fintech apps .

3. Technical compatibility (programming language)

Make sure the API is easy to integrate with your technology stack :

• Supported languages (Node.js, Python, PHP, etc.)
• Well-documented SDKs(Software Development Kits)
• Integration examples and sandbox environment
• Support for webhooks, logs and tests

Rebill offers clear documentation, complete SDKs and technical support at every stage.

4. Costs, commissions and support

Fees and commissions must be taken into account in order to obtain a good quality-price ratio. Support levels and integrated tools (anti-fraud, fees, tokenization) should also be considered.

5. End-user experience

The API you choose must allow you to offer a payment experience:

• Seamless and without redirects (ideally integrated into your app or site)
• With multiple payment methods (cards, wallets, QR, links)
• Adapted to mobile devices
• Reducing churn or cart abandonment

Payment API for Latin America

At Rebill we designed a robust payment API specifically for digital businesses that operate in Latin America or want to expand their operations to the region. If your company needs an automated payment service provider capable of adapting to multiple markets, our infrastructure can help you scale with agility and without friction.

With Rebill you can:

• Accept one-time and recurring payments with credit cards, debit cards, wire transfers and digital wallets.
• Automate the entire collection flow: smart retries, notifications, webhooks, etc.
• Offer a fully customizable embedded checkout in your app or website, with no redirects or external experiences.
• Adapt to multiple countries and currencies from a single integration, with local compatibility (such as payment methods in Argentina, Mexico, Colombia, Chile and more).
• Meet the highest security standards, including tokenization, encryption and PCI DSS compliance, level 1 (the highest).

Our payment API was created to integrate easily with your technology stack , with well-documented SDKs, personalized technical support and a team that understands the needs of digital businesses in the region. Learn more about our API in the documentation.  

Learn more in our documentation or talk to an expert to find out how we can help you get paid better in the major Latin American markets.