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

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

The world is changing faster than anytime before. Enterprises have to create new business modelsto 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 usage 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 increase the need even more in the next years.

HowPaypal leverages Open API for Internal and External Developers

Deepak Nadig (Head of API & Developer Platform Engineering at PayPal) has done a great presentation talking about "Evolution of the Paypal API Platform: Enabling the Future of Money".Paypalvolume 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'sopen APIs are used internally and externally by thousands of developers. The API is included in Paypal's web application, 2nd party applications such as Ebay, and so many 3rd party applications (see figure 1).

Figure 1: Paypal's API Architecture (

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 availableand 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 orStreaming Analytics.However, most companies cannot build their own solution. It is a lot of much 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, thenTIBCO API Exchangeis 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 andJMS)
• 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. Built 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 inspiring example to get started with Open API in your company to create establish new business models and create added business value…

Kai Wähner (@KaiWaehner) works as Technical Lead at TIBCO. Kai’s main area of expertise lies within the fields of Application Integration, Big Data, Analytics, SOA, BPM, Cloud Computing, Java EE, and Enterprise Architecture Management. He is speaker at international IT conferences such as JavaOne, ApacheCon or OOP, writes articles for professional journals, and shares his experiences with new technologies on his blog ().