Webhook vs. API: Key differences, use cases, and benefits

Did you know? We’re all using API and webhooks in our everyday lives. We may not be aware that these requests are being fulfilled with the help of APIs and webhooks. Think about how often you get app notifications. It may be a message alert on WhatsApp, a weather update on your phone, or a notification that your food delivery has reached your doorstep.

In the human world, we communicate with humans verbally to get things done. But when we request things via apps, behind these instant updates are tools that let applications talk to each other: APIs and webhooks.

APIs and webhooks are ways for systems to exchange information, but they work differently. Understanding these differences helps businesses pick the right method for their needs. Let's dive into what APIs and webhooks are.

Understanding webhooks and APIs

What is an API?

An API (Application Programming Interface) is like a messenger that allows two different software applications to talk to each other. In simple terms, it’s a set of rules and tools that lets one program request information or services from another program.

Example: Think of a food delivery app:

• You open the app and request a pizza.

• The app uses an API to send your request to the restaurant’s system.

• The restaurant’s system processes it and sends the response (order confirmed, delivery time) back through the API.

• The app shows you the update instantly.

Without APIs, apps wouldn’t be able to connect with services like payment gateways, maps, weather data, or social media platforms. An API is a bridge that lets applications exchange information safely and efficiently.

What is a webhook?

A webhook is a way for one application to send automatic updates to another application whenever something happens. A webhook pushes information to you in real time instead of waiting for you to request it.

Instead of you asking for information (like with an API), the information comes to you the moment an event occurs based on the given trigger.

Example: Think of a courier service. Without webhooks, you’d have to keep calling the courier company to ask, “Has my package arrived yet?

But with webhooks, the courier company sends you a text message the instant your package is delivered. That’s exactly how a webhook works. In short, a webhook pushes information to you in real time instead of waiting for you to request it.

Webhooks vs. API

Both webhooks and APIs follow similar protocols to function, yet are different in their functionalities and capabilities. Both are designed to send data between the application and server. Many businesses rely on both to keep their process seamless. Let's quickly look at the differences and similarities between webhooks and APIs

Differences

Here’s a quick breakdown of how they differ:

Similarities

Even though APIs and webhooks work differently, they share some common ground:

• They enable communication between applications. Both are designed to let two different systems exchange data with each other.

• They rely on defined endpoints. APIs and webhooks use URLs/endpoints as connection points for sending and receiving data.

• They use standard protocols. Both commonly rely on HTTP/HTTPS for transmitting data securely.

• They’re automation-friendly. Whether through requests (APIs) or event-driven updates (webhooks), both help automate processes and reduce manual work.

• They’re widely used across industries. From e-commerce and finance to SaaS and IoT, both play a critical role in connecting tools and workflows.

When should you use webhooks and APIs for business?

Use APIs when:

• You need to request information on demand (e.g., checking today’s exchange rates).

• The data doesn’t change often.

• You want more control over when and how you fetch updates.

Use webhooks when:

• You need instant notifications (e.g., payment confirmations, form submissions, order updates).

• You don’t want to waste resources on constant polling.

• You want automation based on real-time triggers.

Factors to consider when choosing between webhooks and APIs

When deciding whether to use an API, a webhook, or both, here are some key factors to keep in mind.

The nature of data updates

• If you need real-time notifications (e.g., order confirmations, payment success), webhooks are better.

• If data changes slowly or can be retrieved on demand (e.g., pulling a report), APIs are more suitable.

The frequency of requests

• APIs can cause overhead if you constantly poll for updates.

• Webhooks are more efficient for frequent, event-based updates.

Control vs. automation

• APIs give you more control over when and what data you fetch.

• Webhooks are automatic, which means data comes to you whenever a trigger occurs.

System resources

• APIs may consume more bandwidth and processing power if overused.

• Webhooks are lighter but depend on reliable server availability to catch the event.

Error handling and reliability

• APIs let you re-send requests if something fails.

• Webhooks require retry mechanisms in case your endpoint is down during delivery.

Use case complexity

• For complex integrations where data must be fetched, modified, or combined, APIs are better.

• For simple notifications or triggers, webhooks are faster and easier.

Wrapping up

When it comes to APIs vs. webhooks, the question isn’t which is “better,” but which is the right fit for your business. Each has its strengths, and the best choice depends on your system’s requirements, how often you need updates, and the resources you’re willing to allocate. By aligning the method with your needs, you’ll ensure smoother communication, greater efficiency, and a more reliable setup for your business.