APIs vs. SFTP: The Enterprise Integration Guide That Actually Helps You Decide

Tired of generic "SFTP is for batch, API is for real-time" articles? Same for me, so I created this guide that cuts through the fluff and gives you what you actually need: a decision framework, real-world integration patterns, and practical guidance for enterprise systems.

The 30-Second Decision Matrix

Before we dive into definitions, here's what you came for:

Your Situation	Use This	Why
Need data every hour or less	API	Real-time sync, immediate feedback
Moving 10GB+ files daily	SFTP	Built for bulk, lower bandwidth overhead
Legacy system only exports CSVs	SFTP	Work with what you have
Building a customer-facing integration	API	Better UX, granular error handling
Compliance requires audit trails	Both work	SFTP has file-level logs; APIs have request logs
Your vendor only offers SFTP	SFTP	No choice here
Initial bulk load + ongoing sync	Hybrid	SFTP for historical, API for deltas

Still not sure? Keep reading.

What is SFTP? (The 60-Second Version)

SFTP (Secure File Transfer Protocol) transfers files over an encrypted SSH connection. Think of it as a secure postal service for data—you package files (usually CSV, XML, or JSON), drop them in a folder, and the recipient picks them up.

How it works:

1. Client establishes SSH connection to server
2. Client uploads/downloads files to designated directories
3. Server processes files on a schedule (hourly, daily, etc.)
4. Acknowledgment files confirm successful processing

When enterprises actually use SFTP:

• Payroll file transfers (ADP, Workday bulk exports)
• EDI transactions in retail and manufacturing
• Bank statement imports
• Any system that was built before 2010

What is an API? (The 60-Second Version)

An API (Application Programming Interface) lets systems talk directly to each other through structured requests and responses. Think of it as a phone call—you ask a specific question, you get an immediate answer.

How it works:

1. Client sends HTTP request (GET, POST, PUT, DELETE)
2. Server processes request and returns response
3. Client handles response immediately
4. Errors are returned in real-time

When enterprises actually use APIs:

• CRM integrations (Salesforce, HubSpot)
• Payment processing
• Real-time inventory updates
• Any SaaS product built after 2015

The Real Differences That Matter

Forget the generic comparison tables. Here's what actually impacts your integration:

1. Error Handling: Where SFTP Breaks Down

SFTP failure modes: File arrives with wrong encoding → silently corrupts data. Connection drops mid-transfer → partial file, no rollback. Errors surface hours later when someone notices bad data.

API failure modes: Bad request → immediate 400 error with details. Rate limited → 429 with retry-after header. Errors surface immediately with actionable messages.

2. Data Freshness: The Latency Reality

Method	Typical Latency	Best Case	Worst Case
SFTP	1-24 hours	15 minutes	Days (manual intervention)
API	Milliseconds	50ms	Minutes (rate limits)

3. Scalability: The Hidden Complexity

SFTP at scale: 10 systems = 10 SFTP connections to maintain. File naming conventions diverge. No standard error reporting.

API at scale: Unified authentication (OAuth, API keys). Consistent error formats. Rate limits are published and predictable.

4. Security: The Real Difference

Both encrypt data in transit. The difference is access control:

SFTP: User-level access to directories. Hard to restrict to specific data subsets.

API: Scope-based access (read users, write orders). Granular permissions per endpoint. Every request logged with user context.

Using Both: The Hybrid Approach

When you have millions of historical records plus a need for real-time sync, combine both methods:

Initial Load + Delta Sync Architecture

Why this works:

1. SFTP handles bulk historical data without hitting API rate limits
2. API keeps ongoing changes in real-time

Implementation steps:

1. Export historical data via SFTP (one-time)
2. Note the timestamp of your export
3. Start API sync for records modified after that timestamp
4. Run occasional SFTP reconciliation (weekly/monthly) to catch edge cases

Enterprise Platform Reality Check

Here's what the vendor documentation doesn't always make clear:

Platform	SFTP	API	Gotcha
Workday	HR exports (required for many reports)	Recruiting/Talent (REST)	Large custom reports timeout via API
SAP S/4HANA	Legacy/bulk operations	OData available	Strict rate limits; bulk needs SFTP
NetSuite	CSV imports for bulk	SuiteTalk (full CRUD)	10K+ saved searches need SFTP export
QuickBooks Online	N/A	API-first, excellent docs	Batch operations have strict limits
ADP	Payroll exports (standard)	HR APIs (limited)	Most payroll integrations are file-based

Cost Comparison: Quick Math

1 million records/month, ~1GB data

Method	Infrastructure	Hidden Costs
SFTP (AWS Transfer)	~$260/month	Manual error recovery, key rotation
API (varies)	$0-500/month	Token management, SDK updates

Rule of thumb: SFTP wins on predictable infrastructure costs. APIs win when you factor in operational overhead.

Troubleshooting: Common Failures

SFTP

Problem	Likely Cause	Quick Fix
File stuck processing	Encoding mismatch or malformed data	file -i yourfile.csv to check encoding
Connection timeout	Firewall/IP allowlist changed	sftp -v user@host to debug
Duplicate records	Retry uploaded same file	Add timestamp to filename, use batch_id

API

Problem	Likely Cause	Quick Fix
429 Too Many Requests	Rate limit exceeded	Check Retry-After header, add exponential backoff
401 Unauthorized	Token expired	Implement proactive refresh before expiry
Data mismatch	Pagination or timezone issues	Log counts, verify updated_since uses UTC

Migration Path: SFTP to API

Phase 1 (Week 1-2): Parallel run. Keep SFTP running, set up API in read-only mode, compare outputs daily.

Phase 2 (Week 3-4): API primary. Switch writes to API, keep SFTP as backup, monitor error rates.

Phase 3 (Week 5+): SFTP sunset. Reduce to weekly reconciliation, then monthly, and keep credentials for emergencies.

Don't skip Phase 1. The parallel run catches edge cases you didn't know existed.

Decision Framework: Your Final Checklist

Use SFTP when:

• The vendor only offers SFTP export
• Moving 10GB+ in single transfers
• Data freshness of 1+ hours is acceptable
• Working with legacy systems (pre-2010)

Use API when:

• Real-time data required (< 1 hour freshness)
• Building customer-facing integrations
• Need granular error handling
• System supports modern REST/GraphQL APIs

Use Hybrid when:

• Initial historical load + ongoing sync
• Bulk operations exceed API rate limits
• Migrating from SFTP to API gradually

Key Takeaways

1. SFTP isn't dead. It's the right tool for bulk transfers and legacy system integration.

2. APIs aren't always better. They add complexity and can be expensive at scale.

3. The hybrid approach exists. Use SFTP for bulk and API for real-time when you need both.

4. Know your vendor's reality. Some platforms force SFTP regardless of your preference.

Stop asking "which is better" and start asking "which is right for this specific integration."