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Greatness · 2023-11-06T14:03:43Z

You reach for your wallet and pull out a credit or debit card as the case may be, tapping it on the payment terminal to complete your purchase. In that instant, you've participated in a technological and financial revolution that has fundamentally changed commerce. Not that long ago, payments were made exclusively with cash and checks, a slow and inefficient system. Today, electronic payments have become ubiquitous, from online shopping to peer-to-peer money transfers. How did we get here? How did payments go digital? It was not an overnight transformation but rather the result of steady progress over decades. Visionary thinkers and disruptive technologies built upon each other to create the advanced payment systems we now enjoy. Understanding this evolution gives you an appreciation for how far we've come while revealing what may be still to come in the world of payments. From the birth of charge cards in the 1950s to the rise of fintech startups today, this is a brief history of how payments went digital. From Barter toBanknotes: The Origins of Money Barter systems were the first forms of exchange, with people trading goods and services directly for other goods and services. As society progressed, precious metals like gold and silver became popular trading items because of their durability, portability, and universal demand. These metals were eventually made into coins, marking the beginnings of currency.Banknotes, or paper money, were first introduced in China during the Song dynasty. They were initially used alongside coins but eventually replaced them because banknotes were lighter, easier to carry in large amounts, and allowed for more precise denominations.In the 17th century, goldsmiths began storing gold and issuing receipts for the amounts deposited. These receipts were redeemable for gold and started being used as a form of payment, becoming the first banknotes. The gold standard was later adopted, fixing the value of currencies to a specified amount of gold.In the 20th century, most countries moved away from the gold standard to fiat money - currency that is not backed by a physical commodity. Now, most payments are made electronically using credit and debit cards, digital wallets, and mobile payment apps. Cryptocurrencies have also emerged, though they are not officially recognized as legal tender.Money has come a long way from its origins in barter systems. Advancements in technology have enabled faster, more convenient payment methods, though cash still remains an important means of exchange. The future of payments is digital but also inclusive, providing access for people worldwide.The Rise of Credit Cards and Electronic Payments The rise of credit cards and electronic payments revolutionized how we pay for goods and services. In the 1950s, Diners Club introduced the first credit card, enabling customers to pay for meals over time with interest charges. BankAmericard (now Visa) and MasterCharge (now Mastercard) launched in the 1960s, allowing customers to revolve a balance and pay over time.The dawn of electronic paymentsIn the late 1970s, ATMs started dispensing cash and accepting deposits electronically. This was followed by electronic funds transfer (EFT) between accounts in the early 1980s and the first online banking services.By the 1990s, e-commerce began to take off with the commercialization of the internet. Secure online payment systems were developed to enable electronic transactions. Services like PayPal, launched in 1998, allowed individuals and businesses to transfer funds electronically via the internet.Mobile and contactless payments gain groundIn the 21st century, contactless payments using radio frequency identification (RFID) technology, such as tap-and-go credit and debit cards, have become popular for small transactions. Mobile payment services like Apple Pay, Android Pay and Samsung Pay are also widely used, allowing customers to pay in stores using their smart phones.Cryptocurrencies like Bitcoin are emerging as a new type of digital money. However, they are not legal tender and face regulatory issues regarding risk, privacy, and criminal activity that must be addressed before mainstream adoption.Overall, payment systems have come a long way in a short period of time. While cash and checks are still used, digital payments now dominate and continue to shape how we exchange money in the modern world.The Digital Payments Revolution: MobileWallets, Cryptocurrency, and More The rise of smartphones and mobile internet access has revolutionized how we pay for goods and services. Mobile wallets like Apple Pay and Google Pay allow you to pay in stores with just a tap of your phone. You simply load your credit and debit card information into the wallet app, then hold your phone near a compatible point-of-sale terminal to complete the transaction.Mobile wallets are convenient, secure, and available on hundreds of millions of devices, enabling a huge range of people to leave their ...

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[Sticky] How Payments Went Digital: A Brief History of Payment Systems

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Ernest

Dec 30, 2023 5:46 am

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