Payments – An Introduction

  • Payment refers to providing a consideration in exchange for a good or service of value.
  • The history of payments goes back to early civilizations, where different forms of currency and bartering were used to exchange goods and services. In early civilizations, people used items such as cattle, grains, and precious metals as forms of currency. Later, coins and paper money were introduced as a more standardized form of currency.
  • In ancient Mesopotamia, clay tablets were used to record transactions, which is considered as the earliest form of writing. In ancient Egypt and China, metal coins were used as a form of currency. The use of coins and paper money spread throughout the world over time.
  • During the Middle Ages, the barter system and the use of precious metals such as gold and silver were popular. In the Renaissance period, the use of bank notes and checks began to gain popularity. In the 19th century, credit and debit cards, electronic funds transfers, and online payments emerged.
  • In recent years, digital currencies and mobile payments have become increasingly popular. The advent of blockchain technology has also led to the development of new forms of digital currency, such as Bitcoin
  • The following infographics gives a very creative view of the origin and evolution of payments – https://www.visualcapitalist.com/the-history-of-money-explained-infographic/ (Side note: For those interested visualcapitalist.com as wealth of infographics catering to a wide variety of topics. Very informative. Do check it out)
  • In the current world, money backed by central banks has become the most common medium of consideration. The Economist highlights three main qualities of money, “as a medium of exchange, buyers can give it to sellers to pay for goods and services; as a unit of account, it can be used to add up apples and oranges in some common value; as a store of value, it can be used to transfer purchasing power into the future.

Here are some important dates in the evolution of payments

  • 2500 BC: Metal coins are first recorded in use in ancient Mesopotamia and ancient Egypt.
  • 1200 : The use of paper money begins in China.
  • 1400: Banks are established in Europe and begin to issue bank notes.
  • 1600s: Bank notes and checks begin to gain popularity in Europe.
  • 1775 : The first credit card is invented by a man named Edward Bellamy.
  • 1875: The first patent for a “cash register” is granted to James Ritty, an American inventor.
  • 1950: The first credit card, called the “Diner’s Club Card,” is introduced in the United States.
  • 1967: The first automated teller machine (ATM) is installed in London.
  • 1971: The first electronic funds transfer (EFT) system is introduced in the United States.
  • 1990: The first online shopping transaction takes place over the Internet.
  • 2008: The creation of Bitcoin, the first decentralized digital currency, is announced by the pseudonymous person or group “Satoshi Nakamoto.”
  • 2011: The first mobile payment is made using a smartphone.
  • 2015: The European Union launches the “Single Euro Payments Area” (SEPA) to facilitate cross-border electronic payments within the EU.
  • 2020: The usage of contactless payments, mobile payments, and digital wallets increases due to the COVID-19 pandemic.

	


	






	
	
		

		
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