What Is an AI API Gateway? Routing, Failover and Billing Explained

TL;DR

An AI API gateway is a single endpoint between your app and model providers. Your app sends every request to one address with one key. The gateway checks the key, picks an upstream, retries elsewhere if that upstream fails, and records the cost. You need one once you use several models or cannot afford to be down when one provider is.

What does an AI API gateway do?

Calling a provider directly is simple until you have more than one. Each vendor has its own keys, limits, billing and failure modes, and that logic spreads through your code. A gateway moves it to one place.

What happens to a request?

Here is the path of one request through AnyRouter, which is typical of gateways in this category.

1. Authentication. The gateway checks the API key, along with its status, its model allowlist and its quota.
2. Rate limiting. Per-key limits are applied before any upstream is called.
3. Routing. The model name maps to a list of upstream candidates. Health status and priority decide the order.
4. Protocol handling. If the client and upstream speak the same protocol, the request passes through as is. Otherwise it is converted.
5. Failover. If an upstream fails in a way that is safe to retry, the next candidate gets the request.
6. Billing. Token usage from the response is priced and charged to the balance, and failed requests are not billed.

How does failover work?

Failover needs to answer two questions: what counts as a failure, and when is it still safe to switch?

Connection errors, timeouts, and 5xx or 529 responses are typical triggers. A client error such as a bad request is not one, since every upstream would reject it too.

Timing matters as much. Before the first byte reaches the client, switching is invisible. Once text has been streamed, a switch would repeat or contradict it, so the gateway has to stay on the current upstream. That is the rule AnyRouter follows. Candidates can change before the first byte, and after that the attempt is locked.

A circuit breaker sits on top. By default, three failures within 30 seconds take an upstream out of rotation for 30 seconds, so requests stop paying the cost of a timeout against something that is already down.

For more on status codes, see AI API errors explained.

How does session affinity help?

Prompt caching makes repeated context cheaper, but the cache usually lives with one upstream. If every request in a coding session lands on a different upstream, the cache is cold each time. Session affinity keeps related requests on the same upstream while it stays healthy, so cached input stays cached.

When do you need a gateway?

A gateway is worth it when any of these is true:

• You use models from more than one vendor.
• An outage at one provider would hurt your product.
• Several people or services share a budget, and you need usage per key.
• You resell AI access and need balances, pricing and a customer portal.

It may not be worth it when you run a single low-traffic app on a single model. A direct call has one less hop and one less system to trust.

What should you check before choosing one?

• Protocol support. Check that your SDKs and tools work with it, including streaming and tool calls.
• Pricing transparency. You should be able to see input, output and cached prices per model before you commit.
• Failover behavior. Ask what triggers it and what happens to a stream.
• Data handling. A gateway sees your prompts, so read how logs and retention work. A self-hosted gateway keeps that traffic on your own infrastructure.

Frequently asked questions

Does an API gateway add latency?

It adds one network hop, plus a little processing. For LLM calls that take seconds, this is small compared with model time, and it can be repaid when failover avoids a long timeout.

Is an AI API gateway the same as a model router?

The terms overlap. A gateway handles access, limits, failover and billing. A model router may also pick the model for you based on the prompt. Many products do some of both.

Can I self-host an AI API gateway?

Yes. AnyRouter is built to be self-hosted, with the gateway, control plane and customer portal running on your own server.

Next steps

• Set up Claude Code through a gateway.
• Browse models and prices.
• Read the documentation.