For any business - regardless of size, industry or geography -  payments matter more than ever before, writes Alan Torrance, Head of Developer Modernisation and Open Source at J.P. Morgan Payments. They are integral to making payroll every month, issuing refunds, and paying suppliers and staff around the world. But in today’s digital economy, there is a pressing need for more secure, scalable and efficient payment solutions.

Part of the answer to this challenge lies in greater adoption of cloud technology and harnessing Application Programming Interfaces (APIs). These powerful tools are already reshaping payments around the world, enabling innovation, enhancing efficiency and fostering collaboration. 

While for many years the financial sector was hesitant to use APIs due to a lack of clarity around the value they could generate, there has recently been a mindset – and budget – shift. A global McKinsey study found that 81 percent of banking executives surveyed think APIs are a priority for business and IT functions, with large banks now allocating around 14 percent of their IT budgets to API programmes.

APIs: The innovation foundation 

APIs are now increasingly seen as an essential building block of modern financial ecosystems, enabling seamless integration and interoperability in payments, and acting as the foundation for innovation – allowing companies to build and innovate more quickly than ever before. They play a critical role in enabling payment providers to connect with merchants, banks and other players in the ecosystem. This fosters a more cohesive and efficient payment ecosystem, as the interoperability ensures transactions are processed quickly and accurately, which in turn drives seamless customer experiences. 

At the same time, by providing pre-built functionalities and services, APIs reduce the need for developers to build everything from scratch. This accelerates the design and development process and enables companies to develop new payment solutions more rapidly than they previously could. 

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We’re also now starting to see the API opportunity extended even further. Anthropic’s Model Context Protocol (MCP) brings the API opportunity into Agentic paradigms and real payments innovation. MCP enables large language models like Claude to securely interact with APIs, transforming the Artificial Intelligence (AI)-native developer experience and accelerating growth. This novel approach introduces conversational programmability and context-aware execution, allowing developers to leverage AI for more intuitive and efficient interactions with payment systems.

The MCP is an open standard that enables developers to build secure, two-way connections between their data sources and AI-powered tools. Developers can either expose their data through MCP servers or build AI applications (MCP clients) that connect to these servers. This architecture empowers engineers to create intelligent agents that can autonomously interact with APIs, making real-time decisions and executing complex tasks without constant human intervention. 

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Cloud technology has created a true paradigm shift in the payments industry, providing a range of benefits which incumbent on-premise systems simply cannot match. At its most fundamental, cloud technology delivers computing services – such as servers, storage, networking, software, databases and analytics – over the internet, and more commonly known as “the cloud.” From improved security compliance to scalability and cost efficiency, cloud technology offers many benefits which make it essential building material for modern payments. 

One of the great benefits cloud technology brings is cost efficiency. As cloud technology is often provided on a subscription basis, this enables companies to reduce their reliance on expensive hardware and data centres and instead pay only for the resources they need. Many cloud providers also offer advanced tools and services that can streamline operations and remove the need to hire as much in-house expertise to manage cloud-based systems. This model ultimately enables businesses to optimise their resources and manage their finances more efficiently. 

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Another crucial benefit of cloud technology is its scalability and flexibility. Payments systems experience fluctuating demand throughout the year, as well as region by region. Last year, our own J.P. Morgan Payments internal data showed record-breaking transaction volumes in the United States during the peak holiday season from Thanksgiving week through to Cyber Monday, with $2.58 trillion in settled sales, over 600 million peak transactions in a single day and 6,000 peak transactions per second. Without cloud technology, payment providers would not be able to scale their resources up or down as needed to meet consumer demand. A reliable, high degree of flexibility is required to handle increased transaction volumes without compromising stability or security. And to help merchants adapt quickly to changing market conditions and customer needs. 

Security cannot be overlooked in the payments industry, and cloud technology provides strong solutions to protect sensitive information. The leading cloud providers invest heavily in encryption, access controls and threat detection, and in many cases are recognised as experts in these areas. For payments providers, banks and others in the payments ecosystem, working with a cloud provider that ensures compliance with industry standards and regulations is now a necessity in order to maintain security and build trust with their customers. 

As the payments landscape continues to evolve, organisations that embrace cloud technology and APIs, alongside partners to help unlock their full potential, will be able to deliver successful payment experiences – helping them meet changing customer needs both now and in the future. 

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