Looking to streamline operations, improve data security, or create a better customer experience through integrations? Choosing the right type of API is a critical step in making that happen.

APIs are key to making it possible for apps, websites, systems, and platforms to communicate with each other, but keep in mind that not all are created equal.

Choosing the right API is about what you’re building, who you’re sharing data with, and how you want systems to interact.

This article will break down different types of APIs, their pros and cons, and how you can choose the best one for your business needs.

What are APIs?

API stands for application programming interface. It’s a way for two or more software systems to communicate and interact with one another by exchanging information through a set of rules and protocols.

Software and application developers use APIs to more easily access data and functionality from other apps and systems, avoiding the need to develop from scratch or understand the complexities behind it.

Why you should understand different API types

Different types of APIs will impact how your software functions, who can access it, how secure it is, and how easy it is to maintain long-term, which means understanding them is crucial.

Choosing the wrong API architecture can lead to higher costs, compliance risks, integration delays, and even customer churn.

This can cost you time and money and cause stress, all of which will hinder your business performance in the long run.

API protocols

First, let’s look at the most common API protocols.

These protocols define how APIs are structured and how they send and receive responses and exchange data across systems.

Understanding API protocols can help you determine the best type of platform for your business needs.

REST APIs

As one of the most popular types of APIs today, REST representational state transfer APIs are simple, scalable, and flexible when it comes to developing and implementing them.

REST (Representational State Transfer) APIs are one of the most widely used types of APIs today, for good reason.

They’re simple to work with, easy to scale, and supported by virtually every modern web application. For businesses, this means faster time-to-market, lower integration costs, and broader compatibility with the tools your teams already use.

If you’re looking to connect your product to CRMs, billing systems, or document platforms, a REST API can get you there quickly. It’s also great for embedding features like eSignatures or quote generation directly into your app.

REST APIs are considered “stateless,” meaning they don’t store client data or status between requests, and they can communicate directly through connection systems like API gateways.

These APIs use standard HTTP methods like GET, PATCH POST, PUT, and DELETE. They are great for web and mobile app integrations and cloud-based services.

For example, if you’re looking to integrate document workflows directly on your platform, you can use PandaDoc’s developer-friendly API, which uses the REST model.

Our API will help save you time and energy when creating contracts—just ask our client, AeroNet:

“PandaDoc API is naturally dynamic rather than needing manual adjustment. Since switching to PandaDoc it takes us around 80% less time to create each contract. The sales reps don’t have to do anything now. Whereas before, they could spend 10–12 minutes for each customer, now they just spend two minutes, and that’s it!”

– Jean Pagán, AeroNet’s Chief Software Engineer

SOAP APIs

SOAP, or Simple Object Access Protocol, APIs are designed with structure and security in mind. They follow strict formatting rules and are built to handle sensitive transactions, making them a go-to option for financial services and industries where data protection and compliance are non-negotiable.

SOAP APIs are great for enterprise-level apps, since they’re extremely secure. This also makes them great for transactional environments, such as banking.

If your business needs to meet industry standards like HIPAA or PCI DSS, or you handle high volumes of transactions that require logging, validation, and auditing, SOAP APIs provide built-in features to support that level of control.

GraphQL

GraphQL is a newer type of API that allows applications to request exactly the data they need, reducing unnecessary load and making performance for consumers more efficient, especially on mobile networks.

Unlike REST, which can require multiple calls to get related data, GraphQL consolidates requests into one.

This makes it a smart choice for businesses building interactive dashboards, dynamic UIs, or apps where performance and customization matter. It also reduces development overhead by simplifying how frontend teams retrieve and display data.

gRPC

gRPC is a high-speed API framework that’s optimized for internal communication between services. It’s used in systems such as streaming platforms, machine learning services, and large-scale microservice architectures.

If your tech stack includes multiple backend services that need to work together in real time, gRPC offers performance benefits that traditional APIs can’t match. It also supports bi-directional streaming, which can be valuable for complex workflows or real-time data exchange.

JSON-RPC

JSON-RPC is a minimalist API protocol that uses lightweight JSON (JavaScript Object Notation) formatting to send and receive messages.

It’s easy to implement and doesn’t come with the overhead of REST or SOAP, making it ideal for quick-turnaround projects or internal automation.

It’s also useful in environments where bandwidth is limited or where speed and simplicity are more important than advanced features, such as IoT devices or basic system integrations.

Apache Thrift

Apache Thrift is a powerful tool initially developed by Facebook to help systems written in different programming languages communicate efficiently. It’s well-suited for backend services where performance, serialization speed, and cross-language support are key.

If your business runs complex infrastructure across multiple platforms—or you’re building a custom tech stack from the ground up—Thrift gives you the tools to maintain control, scalability, and performance without being locked into a single ecosystem.

Pros and cons of different API types

Let’s take a look at how these different APIs stack up.

API Protocol Pros Cons Best for Example
REST Simple, scalable, flexible; uses standard web protocols Less strict standards for development Fast integrations for SaaS platforms, cloud tools, and embedding features like eSignatures or proposals PandaDoc, Stripe, Slack APIs
SOAP Highly secure, standardized, and structured Heavy and harder to implement Finance, healthcare, or compliance-driven environments with sensitive data and strict regulations Salesforce, PayPal
GraphQL Efficient data retrieval with fewer requests. Flexible and customizable. Requires more setup and understanding. May not be ideal for simple uses cases. Real-time apps, mobile-first platforms, and highly interactive user interfaces GitHub API, Facebook
gRPC Extremely fast and efficient. More complex to set up. High-performance systems or internal communications in large-scale platforms. Netflix backend services
JSON-RPC Lightweight and simple. Easy to implement. Limited features compared to REST or GraphQL. Internal tools, automation scripts, IoT devices, or fast prototyping needs Bitcoin Core API
Apache Thrift High-performance and language agnostic. Steeper learning curve. Requires more configuration and setup. Backend systems that need cross-language support. Facebook (internal services), Evernote

API types

Once you’ve established the API protocol that defines how the platform behaves and communicates, it’s time to choose the type of API. This means considering an open vs. closed platform.

“Once you’ve decided what you want your API to do and understand the protocol standard you’re following, you need to ask yourself, ‘Do I want this to be open to everyone? Do I want it to be closed? Do I want to be partner-only?’ How do I want to expose it and why?”

– Ryan Clifford, Director of Product at PandaDoc

Open/public APIs

Open APIs, also referred to as public APIs, involve minimal restrictions and are available to any team that wants to use them.

These are common for innovative companies that want to share their applications and/or data with other businesses.

Open APIs are great for building community apps or plugins, and especially useful for integrating with third-party platforms.

An example would be NASA’s open API portal. With it, developers can access data, such as with the popular Astronomy Picture of the Day API, which allows other applications to use APOD imagery along with any associated metadata.

Note: Just because it’s an open/public API, doesn’t mean it’s not controlled. You can control it via API authentication, which just means you’re being open with the API reference.

Internal/private APIs

Internal or private APIs are exactly what they sound like—they’re meant to be used only within an organization.

They’re intended to share data and connect systems within the business rather than being exposed to external developers.

Internal APIs are also meant to improve internal processes or smooth out operations by connecting tools and databases, automating workflows, and improving data sharing between different departments.

Partner APIs

These APIs are shared externally, just as with open APIs, but only with select and authorized partner developers or consumers.

Partner APIs are typically used for B2B activities, such as business sharing of customer data with CRM software. In this case, the allowed API can connect the customer data system with the external CRM platform, but no other API use is allowed.

These APIs usually involve stricter authentication and security measures. Their API reference could be hidden from the general public and behind a gated wall. Plus, they come with rigorous usage agreements, especially when compared to public APIs.

Composite APIs

Composite APIs combine two or more APIs into a single request, meaning you can retrieve or send data between multiple sources at one time, instead of having to make numerous calls to different endpoints.

These APIs are useful when trying to reduce server load or improve performance for complex operations.

An example would be a mobile banking app using a composite API to access account balances, recent transactions, and insights on spending simultaneously.

API Type Pros Cons Best for Example
Open/Public Widely used, great for innovation Not as much control over usage, some potential security risks Expanding your reach and third-party integrations Twitter, Google Maps, Spotify
Internal/private Great for improving internal processes and connecting departments Limited to internal use Internal data sharing Netflix, Amazon, Facebook
Partner Strong authentication and security measures, partners are paid directly for services rather than through API use Partner management can be complex, including agreements Strategic partnerships and collaboration Salesforce, eBay
Composite Reduces the number of API calls, offers faster performance API design can be complex Accessing information on transactions or services simultaneously Salesforce Composite API, Microsoft Graph API

How to choose the right API for your business

Ready to get started with APIs?

Here are some things to consider when choosing the right one for your business:

  • Audience: Consider whether this API is for internal use, a partner, or the public. This will determine what type is best for you.
  • Security: Is the data being shared highly sensitive? That might mean you need an API that offers more robust security.
  • Scalability: Do you need an API that will support high traffic, or can you afford the limitations if it means your data will be more secure? The need for scalability is important to consider from the get-go.
  • Complexity: If you’re coordinating multiple services at once, this will point you in the direction of composite APIs, whereas if you simply need a secure collaboration between you and your partner, a partner API might be better.
  • Compliance: Consider what kind of regulations you need to meet (like HIPAA, GDPR, etc.). This could mean you need to go with a heavy-duty SOAP API versus another type.

“APIs can help with improved data security, Ryan says. “The benefit of adopting APIs for security and compliance is that you’re programmatically doing something that takes away human error.”

The bottom line

When you’re deciding which type of API to use, remember to think long-term. Your business will grow, and that means you might need to evolve your API strategy. You might even need additional APIs to meet your needs.

Deciding on the right API type for your business will help you build secure, scalable, and efficient integrations that align with your goals.

Ready to see how PandaDoc can work for you? Request a demo today.

Frequently asked questions

  • REST APIs use standard web protocols like HTTP, plus they’re more flexible and lightweight than SOAP APIs. These are great for scalability as your business grows.

    SOAP APIs are more rigid in nature, as they are built for highly secure, standardized messaging using XML. These APIs are better for enterprise-grade systems that require higher-than-average security. 

  • In general, yes. Private APIs are designed for internal use at an organization, which makes it easier to control access and reduce security risks. Strong authentication and monitoring are still necessary, though. Public APIs are inherently exposed to a broader audience, making them a less secure API.

  • Yes, it’s common for businesses to use a combination of APIs, from internal, partner, to public, depending on their purposes and audiences. Private APIs can help with a business’s internal workflow and operations, while a partner API would help that same business share client data—to a partner CRM, for example.  

    The types of APIs selected just depend on the needs of a business. 

Disclaimer

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