What is an API (Application Programming Interface)?

A beginner-friendly guide to understanding APIs: what they are, how they work, and why they power nearly every digital experience you use.

Imagine you’re trying to order coffee from a drive-thru. You speak your request into the speaker, and someone on the other side hears it and hands the coffee to you through the window. In the digital world, an API works in much the same way. It’s the messenger that lets different software systems talk to each other and exchange data to get the work done — without having to understand each other’s inner workings.

APIs, or Application Programming Interfaces, are the behind-the-scenes tools that make modern technology tick. They power everything from mobile apps to cloud platforms, connecting services and simplifying data exchange.

In this guide, we’ll break down the essentials about what API actually means, how they work, and best practices for using them.

What does API mean?

API stands for Application Programming Interface. You can think of it as a common language that lets different software systems communicate smoothly, without needing to know how the other is built. More technically, an API is a set of rules and protocols that determine how one application can request data from another. Instead of building everything from scratch, developers use APIs to plug into existing systems.

For example, let’s say an app needs to display weather updates. Rather than collecting and processing that data itself, the app can simply use a weather service’s API to fetch the latest forecast. The same idea applies across a wide range of use cases, including:

• Payment processing
• Cloud services
• Social media integration

How do APIs work?

APIs follow a request-response cycle. A client (like a mobile app or web browser) makes a request to a server, asking for specific information or triggering an action. The API processes that request, talks to the server, and delivers a response, usually as data in a standardized format. This interaction is built around two core concepts: the client-server model and API endpoints.

Client-server model

In the client-server model, the client is the party making the request and the server is the system holding the requested data or performing the task. The API stands between them as a translator and messenger. It takes the request, makes sure it’s properly formatted and authenticated, forwards it to the server, and then wraps up the response to send back to the client. It may help to picture a restaurant:

• You (the client) ask the waiter (the API) for a meal.
• The waiter delivers your request to the kitchen (the server).
• The kitchen prepares your order and gives it back to the waiter, who brings it to your table.

Without entering the kitchen, you can make your request and get what you need, quickly and efficiently.

Endpoints and methods

APIs organize their interactions around endpoints, which are specific URLs that map to available services or data. When a client wants something, it sends a request to one of these endpoints.

Each request typically uses an HTTP method to define what action should be taken:

• GET: Retrieve data
• POST: Submit new data
• PUT: Update existing data
• DELETE: Remove data

For example, a request to https://example.com/api/users/123 with a GET method might return details about user #123. A DELETE request to the same endpoint would remove that user’s record.

Types of APIs

Some APIs are designed for the public, while others are tightly secured and used only within a company. Understanding the types of APIs helps developers choose the right approach for their goals. 

For example, you may have heard of Java APIs or interfaces within classes that let objects talk to each other in the Java programming language. Along with program-centric APIs, there are also Web APIs such as the Simple Object Access Protocol (SOAP), Remote Procedure Call (RPC), and perhaps the most popular—at least in name— Representational State Transfer (REST) or RESTful APIs

And new API technologies and styles continue to pop up today, like GraphQL and AsyncAPI to name a few. There are over 15,000 publicly available APIs, according to Programmable Web, plus many thousands of private APIs that companies use to expand their internal and external capabilities.

Here’s a breakdown of the most common API types.

Open APIs (Public)

Open APIs are available to anyone. They’re published publicly with documentation that allows developers to integrate with them easily. Because they’re accessible without special permissions, open APIs are great for expanding reach and creating new user experiences.

Partner APIs

Partner APIs are shared only with select business partners. Unlike public APIs, these require access keys or legal agreements before use. For example, a company might share its inventory system through a partner API. These APIs support secure integrations in B2B environments such as logistics or finance.

Internal APIs (Private)

Internal APIs are for use inside an organization. They connect systems, automate tasks, and move data between departments without exposing functionality to the outside world. An internal API handles data exchange privately to improve collaboration while maintaining security and control.

Composite APIs

Composite APIs combine multiple requests into one. Instead of making separate calls to fetch user info, purchase history, and recommended products, a composite API can deliver all that data in a single response. These APIs are often used in mobile apps and microservice architectures, where performance is key.

Common API protocols

Just like languages have grammar rules, APIs follow specific protocols that define how data is exchanged. These protocols maintain consistency and reliability when different systems talk to one another.

REST (Representational state transfer)

REST is the most widely used architecture for web APIs. It uses standard HTTP methods like GET and POST to interact with resources. Because it’s stateless (meaning each request is handled independently), REST is simple to scale and easy to implement. It’s the go-to choice for building web services that are both fast and flexible.

SOAP (Simple object access protocol)

SOAP is a stricter, XML-based protocol often used in enterprise environments. It supports advanced features like built-in error handling and transaction control. SOAP is ideal for industries like banking, insurance, or healthcare — where security and formal contracts are non-negotiable.

gRPC (Google remote procedure call)

gRPC is a high-performance framework built by Google. It uses HTTP/2 for faster communication and Protocol Buffers (Protobuf) to encode data in a compact format. This makes gRPC ideal for microservices architecture and internal APIs that need low latency and high efficiency.

WebSocket APIs

WebSockets allow for two-way, real-time communication between the client and server. Instead of constantly polling for updates, WebSockets keep the connection open for immediate data exchange. They’re commonly used for:

• Live chat apps
• Real-time dashboards
• Multiplayer games
• Stock market trackers

XML-RPC and JSON-RPC (Remote procedure calls)

These are both RPC protocols that let clients execute functions on remote servers: 

• XML-RPC uses XML to encode its messages, which is older and more rigid.
• JSON-RPC uses lightweight JSON, making it faster and easier to work with. 

While less common today, these protocols still show up in legacy systems or lightweight integrations.

GraphQL

GraphQL is a modern query language for APIs that lets clients request exactly the data they need and nothing more. It is especially useful in mobile and frontend development, where reducing payload size and customizing responses can dramatically improve performance and user experience.

REST vs. SOAP

REST and SOAP are two of the most widely used API styles, but they take very different approaches to communication. Knowing when to use each can save you time and improve application reliability. Here’s a quick comparison:

Benefits of using APIs

APIs can unlock efficiency, drive innovation, and create new business opportunities. Here are some of the top benefits.

Improved integration and collaboration

APIs act as digital bridges, allowing different systems to connect and share data — without needing to be rebuilt from scratch. For example, a cloud-based CRM system can pull customer data from multiple sources (support tickets, sales records, marketing tools) thanks to APIs. This creates a unified view and eliminates isolated data points that could slow you down.

Accelerated innovation and digital transformation

With APIs, organizations can experiment and adapt faster. They provide reusable building blocks that developers can plug into new apps or services. Some companies build entire products around APIs, offering tools for messaging, identity verification, or data analytics. This flexibility speeds up time-to-market.

Monetization and new revenue sources

APIs can also be products. Businesses often offer API access as a paid service, charging customers or partners to use their data or functionality. For instance, a company that aggregates location data might offer tiered pricing for API access, turning technical infrastructure into a direct revenue stream.

More advanced security and compliance

APIs introduce a structured way to control how systems share sensitive data. With proper design, they allow for secure access without exposing the entire backend. For example, instead of giving an external system full access to a database, an API can expose just the needed data under strict security protocols.

User privacy and access control

Modern APIs support granular permissions, which means users and applications only get access to what they’re authorized to see. This is particularly important for a privacy-conscious environment, where regulations like GDPR and CCPA demand strict control over how personal data is shared and used.

Scalability and maintenance efficiency

Because APIs create modular systems, you can scale services up or down without disrupting everything else. If you need to add a new payment gateway, you can simply update the relevant API. They also make maintenance easier. Issues can be isolated and fixed without taking down the whole app.

Real-world API use cases

APIs may be invisible to end users, but they power many of the digital experiences we interact with every day. Here are just a few ways businesses use APIs to improve customer experience, and unlock new capabilities.

Payment gateways

When someone makes an online purchase, an API is what processes the payment. Behind the scenes, APIs connect the ecommerce site with a payment provider to verify the card and authorize the transaction — all in a matter of seconds.

Social media integrations

Want to let users share your content or log in using their social accounts? That’s all powered by social media APIs. These integrations help businesses boost engagement and simplify user experiences, while maintaining control over what gets shared and how it looks.

Third-party logins

Using a “Sign in with…” button is actually an API at work — specifically one based on OAuth, a standard that allows secure login with credentials from another service. This simplifies the user experience and eliminates the need to remember (yet another) username and password.

API security considerations

APIs open doors between systems, but without the right safeguards, they can also open doors to cyber threats. Because APIs often handle sensitive data, security is essential.

Authentication and authorization

Before a system can use an API, it needs to prove who it is (authentication) and what it's allowed to do (authorization).

Common methods include:

• API keys: Simple tokens used to identify the requester
• OAuth 2.0: A widely used standard that lets users grant limited access to their data without sharing passwords
• JWT (JSON Web Tokens): Encoded tokens that securely transmit user information

Data encryption

Any data traveling between systems should be protected from prying eyes. That’s where TLS (Transport Layer Security) comes in. TLS encrypts the connection so that even if someone intercepts the data, they can’t make sense of it. For especially sensitive data, it’s also a good idea to encrypt information at rest.

Rate limiting

APIs can be overloaded if too many requests come in too quickly. Rate limiting puts a cap on how many requests a client can make over a given time, which helps it:

• Protect system performance
• Prevent abuse
• Maintain fair usage across multiple users

When limits are exceeded, the API typically responds with a 429 Too Many Requests error.

10 best practices for working with APIs

An API can power single apps or entire ecosystems. But to make that happen, developers need more than just code. They need a thoughtful and secure approach. Here are ten API best practices that help ensure long-term success.

1. Design with an API-first approach. This makes APIs a key part of the design from the start instead of an afterthought, which means they are easier to scale and reuse. By designing the API before building the application, you can reduce work later.
2. Ensure comprehensive and up-to-date documentation. Clear, accurate documentation makes it easier for developers to understand how to use your API. It also reduces the burden on support staff and speeds up onboarding for internal and external users.
3. Implement careful authentication and authorization. Strong authentication verifies user identity, while proper authorization restricts access to specific data and actions. This prevents misuse and protects sensitive resources.
4. Version your APIs for backward compatibility. Introducing versioning allows developers to make changes without breaking existing integrations. It also helps you manage the lifecycle of APIs more effectively.
5. Prioritize performance optimization. Fast, reliable APIs improve the end-user experience and reduce strain on your infrastructure. Techniques such as caching, pagination, and query tuning can significantly boost performance.
6. Improve error handling and provide meaningful responses. Helpful error messages can guide developers as they fix issues, leading to less frustration. Standardized response codes and detailed messages can make debugging far more efficient.
7. Implement rate limiting and throttling. These controls prevent abuse and maintain fair access to resources for all users. They also help protect your systems during traffic spikes.
8. Ensure API observability and monitoring. By tracking API usage and performance, you can quickly identify any issues and understand trends. Observability helps maintain uptime for reliable service delivery.
9. Secure API data with encryption. Use TLS/SSL to encrypt data in transit — and consider encrypting sensitive data at rest. This helps protect information from interception or tampering during communication.
10. Design for future growth. Build your API to accommodate new features and integrations over time. A modular design with consistent standards will lead to long-term flexibility and scalability.

How APIs enable digital transformation

Companies are digitally transforming faster than ever to keep up with their competitors and increase customer demands. APIs help them digitize, connect, and innovate across their products and services. APIs are a key enabler of these efforts. In fact, 90% of executives say that APIs are mission-critical to their businesses. By adopting API-driven strategies, they can drive growth and innovation. Incorporating APIs into business operations can help:

• Simplify and accelerate their go-to-market strategies
• Enhance customer experiences
• Improve operational agility and speed
• Develop and pursue new revenue, market, and channel opportunities

To learn how to establish an API strategy that can enhance the customer experience or transform your business, read this whitepaper on API strategy essentials.