What is a payment API?
A payment API is a programmatic interface that enables applications to send and receive money by connecting to payment infrastructure. Instead of building relationships with banks, obtaining licenses, and managing compliance in-house, companies integrate a payment API to access payment rails through code.
Payment APIs handle:
- Transaction initiation: Creating payment requests with amount, currency, and recipient details
- Authentication: Verifying user identity and authorization through KYC and security protocols
- Routing: Selecting the optimal payment rail based on destination, speed, and cost requirements
- Status tracking: Real-time updates on transaction processing and settlement
- Reconciliation: Matching payments to invoices and providing transaction history
A payroll platform uses a payment API to send contractor payments to 50 countries without managing banking relationships in each jurisdiction. The API handles currency conversion, compliance screening, and settlement through local rails like SEPA, Pix, or SPEI.
How payment APIs work
An application sends an API request containing payment details: recipient information, amount, currency, and any required metadata. The API validates the request, checking for required fields, proper formatting, and sufficient account balance.
The payment API routes the transaction through the appropriate payment rail. A $50 payment to Brazil routes through Pix for instant settlement. A $50,000 B2B payment to Europe routes through SEPA credit transfer. The API selects the rail based on destination country, currency, amount, and speed requirements.
The API returns a transaction ID and status updates through webhooks. The application receives notifications when the payment processes, settles, or encounters errors. This enables real-time UI updates and automated reconciliation without polling for status changes.
Settlement happens through the underlying payment rail: ACH takes 1-2 days, wire transfers settle within hours to days, instant rails settle in seconds. The API abstracts these differences while providing transparent timing expectations.
Types of payment APIs
Different API types serve different payment infrastructure needs.
Money transfer APIs
These enable cross-border and domestic transfers through various rails. A money transfer API connects to SWIFT, ACH, instant payment networks, and stablecoin infrastructure. Applications specify recipient details and transfer amount, and the API handles routing, FX conversion, and settlement.
Money transfer APIs power remittance apps, global payroll platforms, and B2B payment systems. They handle compliance requirements like sanctions screening and transaction monitoring automatically.
Virtual account APIs
These create unique account numbers for receiving payments. Each customer gets a dedicated virtual account number, enabling automatic payment reconciliation without manual matching.
A SaaS platform issues virtual accounts to 1,000 customers. When customers pay invoices via bank transfer, funds route to the correct customer account automatically. The API provides real-time notifications of incoming payments with customer identification.
Stablecoin payment APIs
These enable payments through blockchain networks using stablecoins like USDC or USDT. Stablecoin APIs handle wallet management, blockchain interaction, and conversion between stablecoins and fiat currencies.
A marketplace uses a stablecoin API to pay sellers globally. The API converts platform currency to USDC, transfers on-chain, and provides off-ramp options for sellers to receive local currency. Settlement completes in seconds rather than days through traditional banking.
Embedded finance APIs
These enable non-financial companies to offer payment features within their applications. A logistics platform embeds payment capabilities so shippers can pay carriers directly through the platform without leaving to use external banking tools.
Common payment API use cases
Payment APIs enable various financial services workflows:
Global payroll and contractor payments
Payroll platforms use payment APIs to pay employees and contractors across multiple countries without establishing banking relationships in each jurisdiction.
A contractor in Nigeria receives payment through local bank transfer, another in Mexico receives via SPEI, while a third in Brazil gets paid through Pix—all initiated through a single API integration. The platform sends one API request per payment, and the API routes each payment through the optimal local rail based on the recipient's country.
Automated compliance: The API screens recipients against sanctions lists, verifies they meet KYC requirements, and monitors transactions for suspicious patterns. This eliminates the need for platforms to build separate compliance infrastructure for each market.
Bulk processing: For high-volume operations, APIs support bulk payment files. A platform processing 50,000 monthly contractor payments uploads a CSV file through the API, which validates all recipients, calculates fees, and initiates payments simultaneously. Real-time status updates show which payments processed successfully and which require attention.
Marketplace and platform payouts
Marketplaces use payment APIs to pay sellers, service providers, or gig workers at scale. An e-commerce platform processes 10,000 seller payouts daily—sellers in Europe receive SEPA transfers, US sellers get ACH payments, and sellers in emerging markets receive stablecoin payments or local currency through regional rails.
The API abstracts routing complexity. The platform sends payment requests with recipient IDs and amounts, and the API handles the rest.
Revenue splitting: A ride-sharing platform pays drivers 80% of the fare, keeps 15% as commission, and sends 5% to an insurance provider. The API processes the split atomically, ensuring all parties receive payment or the transaction fails completely.
Automated scheduling: Sellers configure weekly or monthly payout preferences, and the API automatically initiates transfers when balances exceed thresholds. The platform doesn't manually process thousands of individual payouts—the API handles scheduling, batching, and execution.
Cross-border remittances
Remittance apps use payment APIs to move money between countries at lower cost and faster speed than traditional wire transfers.
A sender in the US initiates a $200 transfer to the Philippines. The API:
- Quotes a real-time FX rate
- Converts USD to PHP
- Routes through the recipient's preferred method (bank deposit, mobile wallet, or cash pickup)
- Completes settlement in minutes rather than 3-5 days
Corridor optimization: For high-volume corridors like US-Mexico, the API uses instant rails like SPEI. For lower-volume corridors, it routes through stablecoin networks to maintain speed while reducing cost. The remittance app doesn't manage routing, the API selects the optimal path.
Rate protection: When a sender initiates a transfer, the API locks the exchange rate for 10-15 minutes. This prevents rate changes during the payment flow, giving recipients predictable amounts. The app displays the exact recipient amount upfront, building trust.
B2B payments and invoicing
Businesses use payment APIs to automate supplier payments and invoice settlement.
A manufacturer receives 200 invoices monthly from suppliers across 15 countries. When the accounts payable team approves an invoice in their accounting system, the API automatically initiates payment:
- Suppliers in Europe receive SEPA transfers
- Asian suppliers get local bank transfers
- Urgent payments route through faster (but more expensive) rails
Automated reconciliation: The manufacturer issues unique virtual account numbers to each customer. When customers pay invoices, the API automatically matches payments to open invoices based on the virtual account, eliminating manual reconciliation. The accounting system updates invoice status in real-time.
Cash flow alignment: Net-30 invoices automatically schedule payment 30 days after receipt. The API queues payments and executes them on the scheduled date, ensuring suppliers receive timely payment without manual processing.
Treasury management
Companies use payment APIs to move funds between accounts, manage liquidity across subsidiaries, and optimize working capital.
A multinational company operates 50 subsidiaries across 20 countries. Treasury uses a payment API to concentrate cash daily: at the end of each business day, the API sweeps excess balances from subsidiary accounts into a central treasury account, optimizing interest income and reducing idle capital.
Programmatic cash positioning: Treasury can move funds between currencies based on FX forecasts, shift money between high-yield and transaction accounts based on upcoming payment obligations, and maintain minimum balances in each subsidiary to avoid overdraft fees.
Real-time liquidity visibility: The API provides real-time balance information across all accounts and pending transaction data showing incoming and outgoing payments. Treasury builds cash flow models using this data, predicting liquidity needs days or weeks in advance.
Subscription and recurring payments
SaaS platforms and subscription businesses use payment APIs to collect recurring payments from customers globally.
A SaaS platform with 10,000 customers across 40 countries collects monthly subscriptions through different methods:
- US customers pay via ACH
- European customers use SEPA direct debit
- Customers in emerging markets pay via local payment methods or cards
The API stores payment methods securely and initiates charges on billing dates.
Smart retry logic: When a payment fails due to insufficient funds or expired cards, the API automatically retries according to configurable schedules. It might retry immediately, then again in 3 days, then in 7 days, using different times of day to maximize success rates. This recovers payments without manual intervention.
Automated dunning: The API sends webhooks when payments fail, triggering email sequences to notify customers. After multiple failures, the API can automatically downgrade subscription tiers or pause service, then restore access once payment succeeds.
On-demand payouts and earned wage access
Gig economy platforms and earned wage access providers use payment APIs to enable workers to access earnings instantly rather than waiting for scheduled paydays.
A delivery platform lets drivers cash out earnings immediately after completing shifts. Drivers tap "Get paid now" in the app, and the API initiates an instant payout:
- Drivers with US bank accounts receive money via RTP in seconds
- Drivers in other markets receive stablecoins or local currency through instant local rails
Fraud prevention: The API monitors payout patterns, flags suspicious behavior (like sudden increases in payout frequency or amounts), and applies velocity limits (maximum payout amount per day or week). This protects platforms from fraud while enabling legitimate instant access.
Speed-cost tradeoffs: The API offers multiple payout speeds—instant (higher fee), same-day (moderate fee), or standard (lowest fee). Users choose their preferred tradeoff, and the API routes through the appropriate rail.
Payment API integration methods
Developers integrate payment APIs through different approaches based on technical requirements.
REST APIs
Most payment APIs use REST architecture with JSON payloads. Developers make HTTP requests to API endpoints with authentication headers. REST APIs are straightforward to integrate and well-supported across programming languages.
Webhooks
Payment APIs send real-time notifications through webhooks when transaction status changes. The application provides a callback URL, and the API posts updates for events like payment initiation, processing, settlement, or failure.
SDKs and libraries
Payment providers offer SDKs in common languages like Python, Node.js, Ruby, and Java. SDKs handle authentication, request formatting, and error handling, reducing integration complexity.
No-code integrations
Some payment APIs offer no-code integration through platforms like Zapier or direct integrations with accounting software and e-commerce platforms. This enables non-technical users to connect payment capabilities.
Payment API compliance and security
Payment APIs must implement robust security and compliance measures.
- Authentication and authorization: APIs use API keys, OAuth tokens, or JWT authentication to verify requests come from authorized applications. Multi-factor authentication and IP whitelisting provide additional security layers.
- Data encryption: Payment data transmits over TLS/SSL encryption. Sensitive information like account numbers uses additional encryption at rest. PCI compliance standards apply when handling card data.
- Compliance automation: Payment APIs handle KYC verification, sanctions screening, and transaction monitoring automatically. The API checks recipients against OFAC lists and flags suspicious transaction patterns.
- Audit trails: APIs maintain complete transaction logs showing who initiated payments, when they processed, and what actions occurred. These audit trails support reconciliation and regulatory reporting requirements.
Choosing a payment API
Fintechs evaluate payment APIs based on several factors:
- Coverage: Does the API support required countries, currencies, and payment rails? A platform serving Latin America needs Pix, SPEI, and local bank transfer support.
- Speed: What settlement times does the API offer? Instant rails, same-day ACH, or multi-day wire transfers?
- Cost: What are transaction fees, FX spreads, and monthly minimums? Calculate total cost at expected transaction volumes.
- Compliance: Does the API handle licensing, KYC, and AML requirements in operating jurisdictions?
- Documentation: Are integration guides, API references, and code examples clear and comprehensive?
- Reliability: What uptime SLAs and error handling capabilities does the provider offer?
- Support: Does the provider offer technical support during integration and production operation?
Due's payment API provides access to 80+ countries through a single integration, supporting both traditional rails and stablecoin infrastructure. The API handles compliance, offers instant settlement in supported corridors, and provides mid-market FX rates. Fintechs can integrate in days rather than months, avoiding the need to establish banking relationships in each market.
