Also called: application programming interface · Last checked: 7 November 2026
In short: An API (application programming interface) is a set of rules that lets one piece of software ask another for data or actions. Businesses use APIs to connect their own systems to AI models and other tools.
Table of Contents
How it works
- Request. One program sends a request in an agreed format, such as “summarise this text” or “send me today’s orders”.
- Check. The receiving system checks the request carries a valid key, a password for software, and that limits are not exceeded.
- Reply. It sends back the data or result, which the first program then uses.
Where you’ll meet it
ChatGPT, Claude and Gemini all offer APIs so developers can build them into other apps. Zapier links tools through their APIs, and accounting software such as Xero uses APIs to pull in bank feeds.
What it means for your business
- Pay by use. AI APIs charge per amount of text processed, which can be cheaper than paying for staff seats.
- Connect your systems. An API lets AI read from and write to your CRM, shop or accounts without copying data by hand.
- Know your dependencies. List the outside APIs your business relies on, and what would happen if prices or terms changed.
Watch out for
- Price and policy changes. A supplier can raise API prices or close access, which can break products built on it.
- Exposed keys. API keys left in code or emails can be stolen and run up large bills.
Example
Reddit. In April 2023 Reddit said it would charge for API access, and its chief executive objected to AI companies using its data without paying. The price was later set at $0.24 per 1,000 requests. The developer of Apollo, a popular third-party Reddit app, said this would cost him about $20 million a year, and Apollo shut on 30 June 2023.
API vs Model Context Protocol
| API | Model Context Protocol | |
|---|---|---|
| What it is | A way for any software to talk to another | A standard way for AI tools to reach data and apps |
| Who uses it | Developers writing code | AI assistants and agents |
| How they relate | Each service has its own | Often wraps existing APIs |
Frequently asked questions
Do I need a developer to use an API?
Not always. Tools such as automation platforms let you connect apps through their APIs with menus and forms. Custom links or large volumes usually need a developer.
Is using an AI model through an API safer than the chat app?
Often yes for business data. Many API terms say your inputs are not used for training by default, but check the contract and data retention settings.
What happens if an API supplier changes its prices?
Your costs rise or your product stops working. Read the notice terms in the contract, track usage closely, and keep a second supplier in mind for critical services.