Application Programming Interface or API, a software programme, acts as a bridge between disparate applications. It performs the intended function when a set of instructions are provided through a user interface (UI). The front-end of UI is usually a website or mobile application.
The following diagram illustrates the basic architecture of any API-based business model:
Guided by the strategy of Open APIs, many companies like PayPal, Master card, Mobikwik, M-PESA, Eko, etc. have embarked on this journey for mobile money and payment services. Though a provider charges a fee for consuming APIs, it makes sense to a variety of user organisations on the basis of time-to-market and cost parameters. For many upcoming organisations, it is more feasible to use open APIs of a specialised company, in a particular service line, instead of building the same.
|Case Study – Eko’s Open API Platform
Eko India Financial Services is involved in the payments sector with a pre-paid instrument (PPI) licence* from RBI. Eko’s key customers include low- / middle-income customers and micro entrepreneurs earning less than Rs. 50,000 (US$ 770) per month. Eko provides technology platform for bill and merchant payments, peer-to-peer fund transfer, and agent-assisted remittancesEko provides open APIs to organisations interested in money transfer, and charges a fee for using its services and APIs. Eko’s open APIs allow partner entities to leverage Eko’s technology platform and connect with NPCI, UIDAI, banks, and aggregators, to build their own products. So far, Eko has released APIs for its domestic money transfer (DMT) business. This allows others to build their business models by consuming these APIs within the allowed boundary conditions. Besides providing superior UI/UX to their customers, partners have developed innovative payment and financial services use cases such as lending, money transfer, P2P transfers, and in-store and online payments.Open APIs have benefitted both Eko and its partners. Eko’s partners are able to scale rapidly and increase their distribution footprint. Through partners, Eko has been able to reach newer geographies. Eko is planning to expand its partner base, as well as introduce new APIs to provide more services through its ecosystem.The diagram below shows how Eko’s open API interacts with other embedded APIs to complete a money transfer transaction.
* Pre-paid payment instruments are payment instruments that facilitate purchase of goods and services, including funds transfer, against the value stored on such instruments.