Quick Guide: How do banks monetize corporate APIs?

Pricing factors for corporate bank APIs

As the adoption of transaction banking APIs grows, the pricing structure of financial institutions will evolve. The monetization of B2B bank APIs can be structured in a variety of ways. Some banks will do a mix of these factors, only one factor, or they may take a different approach entirely.

• Monthly service fee. Some banks charge a monthly service fee per account, per type of bank API connected . For example, a flat monthly fee of between $25-100 for the balances API of one checking account and another flat monthly fee for the same checking account but for the transactions bank API.
• Charge per API call. Other banks charge a flat fee per API call. For example, ten cents (USD) per API call.
• Other: Some banks have offered their APIs at no charge, and other banks have agreed to price-match their APIs and a corporate’s legacy connectivity or electronic bank statement charges.

Read The Hackett Group paper: Why Treasurers should care about bank APIs

Comparing bank API costs vs. legacy connectivity costs

Bank APIs will be a new line item, but corporates can also expect a reduction in host-to-host fees as they advance to real-time bank data. To properly evaluate how multi-bank API connectivity might impact your organization’s connectivity costs, start with a holistic view.

Calculating your current bank connectivity costs:

Step 1: Identify your data sources

• How many banks and bank accounts are you using today? What connectivity methods are used for each, and what is the cost breakdown? What about soft costs like ongoing IT maintenance for format changes or broken connections?
• Do you leverage PSPs or other payment providers? How are you connecting to them today and at what hard cost? What about soft costs like?

Step 2: Evaluate current connectivity methods

• Does your company use EBICS or SWIFT service bureau? What are the costs?
• Does your company have a homegrown connectivity service bureau?
• How much time is spent per week or month on file management? Include activities like importing and exporting files, waiting for a bank file to arrive, the cost of your internal file server and associated maintenance, etc.
• How much time and additional systems are needed from internal IT to protect those connections or systems?
• Are you using bank portal tokens today? How much time does that take for your team each day/week/month?

Step 3: Consider messaging standardization needs

• How is your organization normalizing all the different bank formats today? Are you using a middleware or data transformation tool? What is the cost of those system(s)?
• Are you leveraging a payment connectivity hub for additional messaging standardization? What is the cost?

Read The Hackett Group paper: Why Treasurers should care about bank APIs

Calculate the impact of bank APIs

Now that you have a clear, holistic picture of what your company is paying for bank connectivity today, you can weigh this against the hard cost of what you would save by advancing to bank APIs.

Sample hard cost reductions:

1. Eliminate H2H file delivery costs
2. Reduce fees for bank portals
3. Reduce fees for cross-border payments because you can now view the bank fees at every step of the payment path
4. Reduce the overall number of systems needed to connect to your banks or to standardize the messaging formats across banks
5. Reduce hours needed to perform daily tasks e.g. positioning global cash

Sample hard cost offsets:

1. Reduce idle cash e.g. invest that wire that comes in every Friday afternoon but not at a pre-determined time so you never know when it has hit the account

Sample soft cost wins:

1. Reduce finance’s reliance on internal IT resources
2. Close your books sooner because you’ve advanced to instant reconciliation
3. Never ask “Where’s the wire?” ever again