What is an OCR API?

An OCR API is a set of protocols that allows developers to integrate optical character recognition functionality into their applications. It facilitates the automated extraction of textual data from images, scanned documents, or PDFs, converting it into machine-readable formats like text or structured data. OCR APIs are widely used in document digitization, data entry automation, document indexing, and text-based analytics, providing seamless integration with other systems and applications for enhanced productivity and accuracy.

Key Features of OCR APIs

1. Text Extraction – Converts scanned documents, images, and PDFs into structured formats like JSON, CSV, or Excel.
2. Document Analysis – Identifies tables, paragraphs, and fields, ensuring organized data extraction.
3. Language Support – Recognizes multiple languages and mixed writing styles for global applications.
4. Seamless Integration – Embeds into business applications to automate document processing workflows.

OCR API Use Cases

OCR APIs streamline document-heavy processes, enabling faster and more accurate data extraction across industries.

1. Banking: Automates loan applications, KYC verification, and bank statement processing.
2. Insurance: Automates claim forms and policy documents for faster approvals.
3. Logistics: Processes bills of lading, invoices, and shipping labels, improving supply chain tracking.
4. Healthcare: Extracts patient records, prescriptions, and invoices for electronic health record (EHR) systems.
5. Legal: Digitizes contracts and case files, reducing manual document handling.
6. E-commerce: Extracts order details, receipts, and return labels for seamless fulfillment.

Arbor used Docsumo’s OCR API to process 6,000+ insurance applications monthly, achieving 99% accuracy and reducing claim processing time by 96%.

Why is an OCR API Important?

Here are some of the key benefits of OCR API:

• Automated Data Extraction - Eliminates manual data entry, speeding up document processing.
• Higher Accuracy - AI-powered recognition improves text and handwriting detection, reducing errors.
• Scalability - It handles high-volume document processing, making it ideal for large enterprises.
• Regulatory Compliance - Ensures adherence to GDPR, HIPAA, and financial regulations by securing and structuring critical data.

Hitachi automated bank statement reconciliation with Docsumo’s OCR software, processing 36,000+ statements monthly, cutting manual effort by 50%, and saving 6,000+ hours.

How Does an OCR API Work?

OCR APIs automate document processing by recognizing and extracting structured text from images and scanned files. The process involves multiple stages to ensure high accuracy.

1. Image Preprocessing: Enhances image quality:

• Noise Reduction – Removes distortions and unwanted spots.
• Binarisation – Converts images to black and white for better contrast.
• Skew Correction – Aligns text for proper recognition.
• Resizing & Normalisation – Adjusts size and resolution for accurate processing.

2. Text Extraction: The OCR engine detects characters, numbers, and symbols using:

• Pattern Matching – Compares text with stored templates.
• Feature Extraction – Identifies lines, loops, and curves in the text.

3. Classifying Extracted Text: Machine learning categorizes names, dates, tables, or paragraphs for structured organization.

4. Exporting Data: Converts text into JSON, XML, or CSV formats, integrating it with ERPs, CRMs, or cloud systems.

Grid Finance used Docsumo’s OCR API to extract income data from bank statements, improving accuracy to 93% and cutting loan approval time by 50%.

Key Takeaways

• OCR APIs automate document processing, reducing manual intervention and errors.
• Unlike traditional OCR, APIs extract structured data in real time, improving workflow efficiency.
• Industries like finance, healthcare, and e-commerce benefit from scalable, accurate, and automated document handling.

FAQs

1. How is an OCR API different from traditional OCR software?

Traditional OCR software requires manual setup, while OCR APIs integrate directly into business applications, enabling automated, real-time data extraction.

2. Can an OCR API process handwritten documents?

Basic OCR struggles with handwriting, but Docsumo’s AI-powered OCR API extracts handwritten text accurately, improving data processing for forms, contracts, and invoices.

3. What industries benefit the most from an OCR API?

Finance, healthcare, e-commerce, and logistics utilize OCR APIs for faster, error-free document handling.