SDKs Make The Merchant World Go Round

Consumers take it for granted that they can hail an Uber, hop in, ride and get out at their destination without fumbling for a wallet. That’s just how Uber works.

What if GrubHub required diners to have cash on hand when the food arrived at their home? Or if Venmo required users to enter their credit card number every time they wanted to transfer funds to a friend to cover the dinner bill?

These services have changed the way people do business and live their lives, but if they couldn’t take digital payments without a hitch, nobody would want to use them anymore. They work because they’re seamless. And they’re seamless because of software development kits (SDKs).

“SDKs removed those friction points of having to type in your credit card number or redirect out of the app,” said Adam Blacker, a spokesperson at Apptopia. “Before, you would click on an app, go to pay and it would take you out of the app. You’d have to type in your PayPal username and password, or you’d have to fill out your credit card info in the app.”

Now, paying is easier than ever before.

“With Uber and Lyft, you don’t even know you’re paying – it’s seamless,” Blacker said. “You don’t have to click to pay. But [those companies] don’t have their own [SDKs], because payments are hard. Creating their own wasn’t worth their time, money and effort. So, instead, they implement other peoples’ on the back end [of their apps].”

An SDK is a piece of code that developers can download as a text file and implement within an app rather than building a payment platform of their own. When a payment is processed through the SDK, the original creator gets a small cut of the profit.

Every major app that has changed the way people live over the past five to 10 years is built on a software development kit. Uber, GrubHub, Venmo, Airbnb, Pinterest, TripAdvisor, SnapChat and Instagram are just a handful of the heavyweights.

Apptopia recently ran the numbers to find out which payment SDKs ranked highest in the iOS App Store and on Google Play based on the number of apps in which the kit was currently installed.

PayPal’s kit was far and away the winner on both app stores, with Square close behind on iOS and Cardio coming in second on Google Play. Braintree and Stripe made the top five in both lists, though their install numbers were only a fraction of PayPal’s (and Braintree is owned by PayPal).

But perhaps more interesting than which kits are most widely used is the data on who is using them. “Food and Drink” was the number one category for iOS SDK installs. On Google Play, the top category was “Business,” although the businesses doing the installs seemed to also focus on food and drink.

Travel ranked high, with many hotels now accepting payments through apps. The same was true for events platforms like Fandango and Eventbrite.

Venmo, a subsidiary of PayPal, used Braintree and PayPal’s SDKs encouraged by the high rate of acquisition by consumers. But with only 153 installs via iOS, it is pretty clear that the kit isn’t taking off as the company had hoped.

Still, that doesn’t mean merchants aren’t using PayPal or Braintree, and Venmo has enjoyed a spot in the top 15 SDKs downloaded to iOS, along with LevelUp. It didn’t make the cut on Google Play, but Alipay did – which makes sense because, according to Blacker, it has a more global audience.

Venmo may have also relinquished its throne in the peer-to-peer payments corner.

Traditional banks did not like that people had stopped using their apps, but banks weren’t putting out good apps. Transferring funds to another institution could take three to five days, and other apps allow for instant transfers. Zelle, for example, works across all major banks — including Wells Fargo, Bank of America, and JPMorgan Chase — to enable instant transfers to any other bank in the partnership.

Suddenly Venmo wasn’t looking so good. Its payments were fast, but not instant. The company countered this by introducing instant payments for a fee of 25 cents. Blacker is not sure that will be enough to keep users on the platform, especially now that they can get the same functionality from their own banks.

SDKs are opening more and more doors for merchants, and not just in the food and drink industry. Big retailers like Macy’s have adopted PayPal’s SDK and now lets shoppers pay via its One Touch functionality. Brick-and-mortar shoppers are going to see more and more of this in the coming years as retailers work to compete with online shopping platforms.