Understanding APIs and their economy

BY ANTONY MUTUNGA

Since the late 1960s the Internet has rapidly evolved, evident in the introduction of other technologies such as artificial intelligence (A.I) and cloud computing. 

According to the Digital 2019 April report, between 2018 and 2019, there were 350 million new Internet users bringing the total to 4.4 billion active Internet users worldwide.

Organizations have since learnt that in order to grow and expand, they have to be where the customers are, as they can no longer rely on transacting in operational silos. Before, organizations used to host their business metrics in databases or spreadsheets in-house but this has since changed. Most organizations rely on third parties to host their data, which can be frustrating to navigate.

As a result, Application Programming Interfaces (APIs) have become quite popular as they open up and allow other parties partial access to an organization’s system. They expose some of a product’s or service internal functions in a controlled environment. They can also be defined as a set of regulations and requirements for building applications as they specify how software components should interact. To better understand APIs, take the instance where one uses a Google API to streamline, signing up on a site or an application, for example, Quora. 

Even though modern APIs are the reason behind its popularity, API is not a new concept as it was first used in the 1960s as libraries in operating system. With distributed systems coming up, APIs progressed even further in 1970s. This brought about new techniques that allowed remote access of procedural API as well as the avoidance of the cost taken up by programmers in order to create all the transport, plumbing and data handling needed for interaction between different computers.

In 2000 Roy Fielding, one of the people involved in the evolution of the World Wide Web, published a description of the Representative State Transfer (REST) architecture style. After a short time, the first appearance of a web API took place as Salesforce, a cloud-based software company, launched an API shortly thereafter. This was followed shortly by eBay, which rolled its own API to allow developers to create portals for directly accessing its database. 

From then on, APIs became quite popular. According to ProgrammableWeb, the leading source of news and information about APIs; public APIs have increased rapidly to stand at over 17,000 in production as of 2017. The growth of the APIs is attributable to the introduction of the Smartphone, which rely on APIs to get data from the device to their system. 

With the sharing of data helping to expand the digital technology, APIs have been in the forefront of the growth. They have assisted businesses to innovate faster and reach new audiences. As a result, almost every business industry with an online presence has an API or is using one

APIs have revolutionized everything from how we hail taxis to how we share moments on social media. With the sharing of data helping to expand the digital technology, APIs have been in the forefront of the growth. They have assisted businesses to innovate faster and reach new audiences. As a result, almost every business industry with an online presence has an API or is using one, from the financial sector to the shopping industry. 

For instance, banks have come up with the concept of open banking, where with the consent of their customers, they are able to share their financial data via APIs. In doing so, third parties are able to leverage the data and create personalized services. On the other hand, Amazon has revolutionized its industry in not only being an online retailer but also acting as a massive merchant portal. The merchant platform itself relies on APIs to allow easy recruitment of new members.

This increased integration of APIs in business models has brought on what is known as the API economy. Not only are big international companies taking advantage of the API, companies in the developing countries have also not been left behind. 

Kenya’s Equity Group has looked to the technology to reach new audiences and to expand through its subsidiary, Finserve. Through Equitel, its money management platform, Finserve launched the Jenga APIs to provide an integrated platform for businesses to send money, buy, pay, manage their accounts, manage credit, withdraw and conduct Know Your Customer (KYC), Credit Reference Bureau (CRB) and Anti-Money Laundering (AML) queries.

According to Jack Ngare, managing director of Finserve Limited, one can now use over 64 fintech, regulatory technology (regtech) and insurance technology (insuretech) APIs to power one’s business. After launching the Jenga API in the third quarter of 2018, according to Equity Group Holdings Plc Investor Briefing Q1 2019 performance report, the new platform was able to record over 2,000 businesses, large and small, using it to automate their back-end system, provide multiple payment options to their customers, and expand their revenue streams.

Apart from Finserve, APIs have also played a major role in the growth of one of Kenya’s most profitable organizations, Safaricom. In 2015 when Safaricom was moving its data center from Germany to Kenya, the dominant telco came up with a new platform dubbed ‘G2’. Before, developers were not allowed access to the telco’s system however with the new platform, Safaricom had promised to open its systems to developers. Living up to its promise, the company came up with the M-Pesa G2 API. 

Despite having access to the M-Pesa API, only a small number of developers were able to navigate through it and integrate with their applications. An example of an application that came out of this was SapamaCash.com by Sapama Technologies, which enables merchants to record, analyze and draw insights from payments and customer details. Despite some applications being born from the opening up, it was still a challenge for most developers as a result of the requirements needed and the long process of integrating with M-Pesa.

In order to change this and encourage the co-creation of solutions that run on the M-PESA platform, Safaricom introduced a new M-Pesa API dubbed the ‘Daraja API’. With the new API, developers found it easier to integrate with M-Pesa. Daraja API will allow businesses to integrate smoothly with both Lipa Na M-Pesa buy goods and PayBill cashless payments into websites, Point of sale terminals, mobile apps, and other business solutions. Daraja API includes all the services that G2 API offered such as C2B, B2C and reversal as well as new services such as B2B, transaction status, account balance and Lipa na M-Pesa online.

Through Daraja API, many businesses have integrated with M-Pesa and have been able to profit from it. One example is Twiga Foods, a mobile supply platform for fruits and vegetables. Daraja API acts as a translator between M-PESA and Twiga Food’s system. It enables Twiga Foods to deploy Customer to Business (C2B) and Business-to-Business (B2B) functionality. Just like Twiga Foods, the Daraja API has enabled other businesses in different sectors.

Application Programming Interface is helping businesses with online presence all over the world; it is taking them to the next step in these technological times. From calling a taxi to buying movie tickets online, APIs are now everywhere. In order for a business to survive and expand in this sharing era, understanding APIs is crucial as they are the future.   

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