The way money moves online is changing faster than ever. Analysts expect the global payment gateway market to jump from USD 26.7 billion in 2024 to $48.4 billion in 2029. That growth is fueled by API-based systems, such as payment gateway APIs that enable instant, seamless transactions across industries.
What is a payment gateway API?
At its core, a payment gateway API is the link between a website or app and a payment provider. It handles the secure back-and-forth between the merchant, the customer, and the bank, so transactions are authorised and processed in real time.
Not all APIs are the same. A general “payment API” covers a variety of digital payment tools. A “payment request API” is more specific, usually built into browsers to speed up checkout. Different tools, same purpose: enabling reliable digital payments.
Payment gateways themselves authorise, process, and settle transactions. The API extends these capabilities by giving businesses the flexibility to create tailored checkout experiences, accept multiple payment options, and expand into new regions as they grow.
How does a payment gateway API work?
The role of a payment gateway is to act as a secure channel between the merchant and financial institutions. The API manages the technical details of this process in the following steps:
- Checkout begins: A customer selects items and moves to checkout on the merchant’s website or application.
- Submission of payment information: The customer enters their details, such as card number or wallet ID. The API encrypts this sensitive payment information before transmitting it.
- Authorisation request: The payment gateway API sends the encrypted details to the acquiring bank, which then routes them through the card network or wallet provider.
- Validation with financial institutions: The issuing bank or wallet provider confirms available funds, performs fraud detection, and approves or declines the transaction.
- Response to merchant: The payment gateway communicates the result back via the API, allowing the merchant to confirm payment instantly.
- Settlement: Funds are transferred from the issuing bank to the acquiring bank, then settled with the merchant.
- Refund handling: If required, the API also supports partial or full refunds.
Functions of payment APIs
Payment APIs and payment gateway APIs provide the core tools that make digital transactions possible. Some of their key functions are:
- Secure transaction processing – Authorises and completes online payments between customers, merchants, and banks in real time
- Support for different payment methods – Cards, digital wallets, and bank transfers can all be handled through one integration.
- Multi-currency handling – Lets businesses accept payments in local currencies while expanding to international markets
- Refunds and cancellations – Refund requests can be triggered automatically, making after-sales service faster and less manual.
- Data protection – Encryption and tokenisation safeguard sensitive information and help meet compliance standards like PCI DSS.
- Fraud checks – Built-in tools analyse transactions for unusual activity, reducing the risk of chargebacks.
- Integration options – APIs and SDKs make it easier for developers to connect with different providers and maintain the system.
- Reporting and reconciliation – Finance teams can use dashboards and logs to track, audit, and improve payment performance.
- Recurring billing – Enables subscription models and other use cases where repeat payments are required.
Together, these functions give businesses the ability to serve more customers, cut down on failed transactions, and provide flexible ways to pay.
Benefits of payment gateway APIs
- Expanded functionality – Businesses can go beyond simple card payments and enable options such as subscription billing, recurring charges, or one-click checkout.
- Lower costs on cross-border payments – Using local acquiring through APIs often means reduced transaction fees compared to relying only on international processors.
- Easier global expansion – Instead of building a separate integration for every market, APIs can handle multiple currencies and regional payment methods in one setup.
- Stronger fraud protection – Encrypted communication and built-in risk tools help prevent fraudulent activity while keeping sensitive customer data safe.
- Simplified refunds – Refunds can be triggered directly through the API, saving finance teams from manual intervention and speeding up resolution for customers.
- Improved checkout experience – Faster authorisations and support for preferred local payment options help reduce cart abandonment and improve conversion rates.
In North America, payment gateways accounted for more than 36% of global revenue in 2022, with the US market alone holding 65% of the region. These figures highlight the regional strength and market potential of APIs in digital commerce.
How to integrate a payment API
Integrating a payment API involves both business planning and technical work. The exact path depends on your company’s goals, markets, and resources, but most projects follow a clear set of stages:
- Define requirements: Involve product, finance, and engineering teams to decide which payment methods, currencies, and regions you need to support. Clarify compliance needs and review expected transaction volumes.
- Select a provider: Research potential payment gateway providers and compare them on fees, global reach, fraud detection tools, and compatibility with your existing systems.
- Set up your account: Once you choose a provider, create your merchant account and request API credentials. These will include test and live keys.
- Prepare infrastructure: Add the necessary SDKs or code libraries, and configure your servers to securely communicate with the payment gateway API. Apply security measures such as tokenisation, PCI DSS compliance, and strong encryption for sensitive data.
- Implement the flows: Build the checkout, authorisation, refund, and settlement flows. Configure webhooks to receive real-time transaction updates.
- Test extensively: Use the sandbox environment to simulate different scenarios including successful payments, declines, refunds, and high-volume loads. Collect feedback from internal teams such as operations and customer support.
- Go live and monitor: Switch to production credentials and run controlled real payments before full launch. Continue to track transaction performance, error rates, and buyer feedback, making adjustments as required.
Timelines vary. A straightforward integration can be completed quickly, while complex implementations with multiple regions or advanced fraud tools may take longer. What matters most is aligning the integration with your business objectives and ensuring reliable handling of all transactions.
How to choose the best payment gateway
Selecting the best payment gateway API involves considering financial, technical, and strategic factors:
- Transaction fees: Understand costs for domestic and cross-border payments.
- Payment methods and payment options: Check coverage for the markets you serve.
- International payments: Ensure multi-currency support and compliance with local regulations.
- Fraud detection tools: APIs should provide strong monitoring to protect your revenue.
- Refund and settlement handling: Review refund workflows and settlement timelines.
- Checkout flexibility: Look for APIs that allow you to customise the payment experience.
- Integration effort: Evaluate whether SDKs or direct API methods fit your technical team’s capacity.
- Reliability of payment gateway provider: Assess uptime, support, and reporting capabilities.
Conclusion
Payment gateways and their APIs now sit at the core of digital commerce. They allow businesses to accept payments securely and efficiently, while also supporting features such as refunds, fraud checks, and multi-currency transactions.
A strong API can help improve approval rates, cut costs, and give customers a smoother checkout experience. Antom’s platform is designed with these goals in mind, offering businesses the tools they need to integrate payments easily and scale across global markets.