Creating Business Value by Example: Open API and API Management at Paypal

The world is changing at a faster rate than any time before. Enterprises have to create new business models to compete in the market and increase revenue. APIs represent the leading edge of new business models, providing innovative ways for companies to expand brand value and routes to market, and create new value chains for intellectual property.

The use of APIs in many ways offers several opportunities for enterprises such as increased revenue, reduced costs, and improved efficiency. API Management will become important in many areas, whether that be internal, business-to-business (B2B) or business-to-customer (B2C) communication. Therefore, according to Gartner, API Management and SOA Governance are converging into a consolidated space called “Application Services Governance.” Big Data, Cloud, Mobile, and Internet of Things will increase the need even more in the next years.

How Paypal Leverages Open API for Internal and External Developers

Deepak Nadig, Head of API & Developer Platform Engineering at PayPal, gave a great presentation talking about “Evolution of the Paypal API Platform: Enabling the Future of Money.” Paypal volume in 2013 was 180 billion USD! As of today, almost everything can be paid with Paypal—be it your next taxi, pizza or clothes. Paypal earns money with every transaction. That is a real, huge business case for open APIs, isn’t it?

Paypal’s open APIs are used internally and externally by thousands of developers. The API is included in Paypal’s web application, second-party applications such as Ebay, and so many third-party applications (see Figure 1).

Figure 1: Paypal’s API Architecture (http://www.infoq.com/presentations/paypal-api-evolution)

Paypal’s solution for API Management is custom software development. It uses an event bus for real-time processing, a custom routing engine (implemented with Groovy), and open standards such as REST and OAuth. A self-service portal is available and used by external and internal developers. A hello-world connection to an API must be achievable within some minutes, otherwise the API is too difficult to use and does not pass “Paypal compliance.” Ease of use, flexibility, and time-to-market are key requirements.

Companies such as Paypal, eBay, Facebook, Google, Amazon or Netflix often build their own custom solutions, as no products are available on the market when their requirements come up (years before a “common company” has the same requirements). That is true for so many “buzzwords,” e.g. Open API, Hadoop, Microservices or Streaming Analytics. However, most companies cannot build their own solution. It is a lot of effort, high complexity, high costs, and high risks.

How to Leverage Open API in Your Company

Paypal’s API architecture is very similar to TIBCO’s Fast Data platform. If you want to establish new business models and create added business value for your company, then TIBCO API Exchange is the right choice. It offers so many major requirements for an open API architecture out-of-the-box, for example:

• Standards-based technologies (such as REST/SOAP Web Services and JMS)
• Elastic, highly scalable architecture for millions of messages (based on an event driven architecture)
• Flexible configuration, routing options, and user management using different security standards (such as LDAP, SAML, Kerberos, OAuth, WS-*, XACML, etc.)
• Gateway features for management of internal and external service calls (such as routing, validation, caching, and throttling)
• Self-service portal for easy enablement of employees, new partners or unknown external developers (including API features such as testing or different customizable subscription plans)
• API Analytics for API consumers (to measure and improve application performance) and API providers (to measure and improve on the success of API initiatives)
• Elastic private/public/hybrid cloud infrastructure using TIBCO’s PaaS solution, Silver Fabric,  and its Enabler for API Exchange

The combination of TIBCO API Exchange with BusinessWorks 6 is even more powerful and can be used to build services and expose their APIs—build your own open API architecture in a modern and flexible way. Innovation and time-to-market are key success factors. Taking a look at the concept of Microservices might also help in this case to implement, test, and release each business function independently and automatically (using concepts such as Continuous Delivery/DevOps).

So, let’s take Paypal as an inspiring example to get your company started with open API to establish new business models and create added business value.