Sabeer Nelliparamban is the Founder & CEO of Zil Money Corporation, Online Check Writer and Tyler Petroleum Inc.
The B2B payment landscape is experiencing disruption like never before with the shift to headless architecture. Rather than monolithic legacy systems that have preset functionalities, businesses today are looking for malleable systems—ones that can be built, customized and even deconstructed as needs evolve. Simply put, the days of rigid, one-size-fits-all software are over. The future might be modular applications that businesses can assemble like Lego sets.
Gartner had predicted that organizations that used composable technology would generate 30% higher revenue compared to their counterparts by 2025. B2B PayTechs that offer a traditional software solution to users might have to adapt their strategies in the coming years to take advantage of composable architecture and create API marketplaces for continued success.
The Role Of APIs In Driving Innovation In B2B Payments
APIs (application programming interfaces) have become an integral part of the service roster of leading payment platforms. This is because they break down silos and enable businesses to integrate various services and tools. But the most important and strategic use of APIs is that they can be used to add new features without overhauling existing systems.
Proper API management is going to be crucial if PayTechs are committed to adopting composable architecture as APIs are the connecting links between modular components. Without effective APIs, the shift to composable architecture can lead to inefficiencies, security vulnerabilities and operational disruptions.
The Rise Of API Marketplaces
The global API management market size, valued at USD 5.42 billion in 2024, is projected to grow as companies increasingly adopt API-based architectures to drive innovation and operational efficiency. Many fintech platforms currently offer APIs for essential services like payment processing, virtual cards, check printing and banking integration. However, the next phase of API evolution involves creating API marketplaces, where businesses can access a library of specialized APIs to build their unique ecosystems.
B2B PayTechs have two options: create their own API marketplace or market their APIs on platforms like RapidAPI and similar marketplaces. The first option would give them better control over pricing and branding. It allows PayTechs to position themselves as ecosystem leaders, providing a central hub where businesses can find APIs tailored to their specific needs. Alternatively, marketing APIs on established platforms can help reach a broader audience quickly. These platforms already attract a large pool of developers and businesses looking for plug-and-play solutions, reducing the need for extensive marketing efforts.
Key Benefits Of Offering Composable Architecture
B2B PayTechs can gain various advantages in the market by offering composable architecture to clients.
1. Customization For Specific Industries
Payment platforms widely overlook the fact that different industries have specific payment needs and offering monolithic software might not be the best solution anymore. Look at the logistics industry—their requirements range from needing proper tracking options for complex supply chains to managing multiple parties and adhering to different international regulations. A generic software might fail to meet all the needs. A composable architecture can allow payment platforms to integrate specialized tools that streamline invoicing, real-time payment tracking and compliance with cross-border trade regulations.
2. Faster Market Adaptation
Composable architecture allows PayTechs to respond to market changes faster. Instead of rebuilding entire systems, PayTechs can quickly introduce new modules or adapt existing ones. This helps platforms remain competitive in the rapidly evolving B2B payments market. For example, if a new regulatory requirement or technological advancement emerges, PayTechs can update specific modules rather than redesign their entire platform.
3. Revenue Diversification
Offering composable architecture opens up new revenue streams for PayTechs. Companies like Stripe, PayPal and Adyen are already profiting from API monetization. By providing modular APIs and specialized components, B2B PayTechs can monetize these individual modules or access fees from third-party developers. This shifts their revenue model from traditional transaction fees to more flexible, usage-based models.
Challenges In Offering Composable Architecture
PayTechs should be ready to address and find solutions to these potential challenges before going all in on composable architecture:
1. Integration Complexity
For a B2B payment platform built through composable architecture to function properly, diverse systems, APIs and data sources must integrate seamlessly. The amount of time and effort necessary to ensure that disparate technologies connect efficiently can be substantial. The whole strategy can become a trial-and-error process that requires extensive planning and troubleshooting. In order to ensure smooth integration, PayTechs can use widely accepted API standards and prioritize regular testing.
2. Security And Compliance Risks
In the U.S., PayTechs are subject to operational and compliance requirements, including anti-money laundering (AML) laws, the Bank Secrecy Act (BSA) and state-level financial regulations.
Composable architecture increases risks due to more integration points for attacks, stricter data protection needs and global compliance challenges like the General Data Protection Regulation (GDPR). API updates without notice can disrupt systems or cause rule violations. Businesses can mitigate risks with encryption, regular audits, centralized API control and automated compliance tools.
3. Increased Overhead For Maintenance And Updates
Managing independent modules can be more time-consuming and costly compared to handling a monolithic system. PayTechs must handle versioning, updates and bug fixes for multiple components, which can increase operational overhead. If not managed properly, updates to one module could lead to disruptions in the overall system.
PayTechs can reduce the overhead of maintaining modular systems by using automated tools for updates, testing and centralized API management to ensure smooth integration. Designing loosely coupled components and maintaining clear version control helps prevent disruptions and keeps the system efficient.
Final Thoughts
The shift to composable architecture seems to be the next step in the evolutionary life cycle of PayTechs. Many payment platforms are already transitioning from monolithic systems to modular setups. Perhaps the industry will witness a rapid expansion of API marketplaces and specialized tools that will change how businesses use payment technology frameworks. PayTechs that master this transition stand to define the next generation of B2B payment solutions.
Forbes Business Council is the foremost growth and networking organization for business owners and leaders. Do I qualify?
Read the full article here
