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Paywer is a global Payment Solutions Specialist.

A Very Brief History of Payment Systems

Before Bitcoin, online payments and the credit card networks, there was the use of metals and gold as a method of payment. From the 13th century, payment has gone through lots of changes and developments and in this article, we intend to highlight some of these pivotal moments in the history of payment.

13th to 16th Century - Bills of Exchange

It is in the 13th century that all began, during this time Venice, introduced the bills of exchange which allowed international trade without one having to carry gold which was used as form of payment during those days. By the 17th century the bills of exchange were being used for both domestic and international payments. One of the first and known check was drawn on Clayton and Messrs Morris bankers and scriveners on February 16th 1659 and it was worth 400 pounds which is equivalent to 43, 000 pounds today, it was signed by Nicholas Vanacker and paid to Mr. Delboe.

1700 to 1800 - Overdrafts

In the year 1727, the Royal Bank of Scotland introduced overdraft. We all enjoy bank overdraft but did you know it was introduced in 1727? Did you know it was invented in Scotland? I bet you did not. The Royal Bank of Scotland allowed William Hog a merchant to take 1000 pounds equivalent to about 63, 664 more than he had in his bank account. In the year 1782 tax was imposed on checks made out with exceptions of the navy and the army.

1800 to 1900 - Money Transfer

Not much happened in this period but one of the pivotal moments was the introduction of money transfer in 1871 by Western Union. And in the 1890s, it introduced its services to North Africa, Europe, Asia and America (both north and south).

1900 to 1949 - Credit Cards

In the year 1914, the US Western Union introduced the first metal cards and they were nicknamed metal money. The card gave free deferment payment privileges. And it was until 1920 that credit cards were first introduced by hotel chains and US oil companies.

In 1946, the first bank card was introduced by Brooklyn banker John Biggins, when a customer used the card to purchase and the bill was forwarded to Mr John’s bank. Back then the purchase was just made locally and one had to have an account at the Biggins bank. In the year 1958, American Express introduced a paper charge card. Later that year they launched BankAmericard. It was until the year 1959 that they switched to plastic.

The 1960s - Cash Machines

In the 1960s not much happened. In the year 1962, the Diners Club became the first major charge card company in Britain after a merger between the credit card facilities and finders services. In the year 1966 Barclays bank introduced the first UK credit card. The first cash machine in the world was introduce by Barclays Bank in the year 1967.

The 1970s - Debit Cards

In the year 1970, the first prepaid products were introduced to be used by students for transit and those on campus. Still, in 1970, the smart card was introduced and the idea was patented by Dr Kunitaka and it remains the only idea on the same. In the year 1974, Roland Moreno of France patented his idea of the IC card, which was later dubbed as a smart card.

In the year 1978, the first debit card was introduced by Seattle national bank and it was given to business executives who had substantial deposits in their bank accounts and had long good standing. Later in 1979, Visa improved the imprint machines and the result was the first credit card machine.

The 1980s - Smart Cards and Online Shopping

In the year 1983, the widely used MasterCard was introduced. In the year 1984, the smart cards introduced in 1970, reached a milestone when it as successfully tested and ATM banks with chips. After just 2 years, the smart cards were used all over the world. Still in 1984, the first online shop was introduced by Mrs. Jane Snowball when she used a TV and a controller to purchase some groceries. In late 1980s, the first prepaid phone cards were introduced.

The 1990s - Electronic Payments

In the year 1992, MasterCard introduced launched the brand for its international debit cards. In 1993 e-cash was introduced and became the world’s first electronic payment. In 1994, the first online purchase was carried out the United States. It was in 1996 that the Visa electron was launched.

The first mobile payment was introduced by Coca Cola in 1997 when they introduced 2 vending machines in Finland and the customers could make purchases via text message. In the year 1998 the world most used wireless mobile payment company was launched, PayPal.

2000s - Bitcoin & Cryptocurrencies

In the year 2000, the first universal electronic wallet was created as a result of an association of the 12 largest manufacturers of credit cards, credit associations and special software. In the year 2001 history was made when debit expenditure exceeded credit expenditure for the first time. In the year 2004, another history was made when the card expenditure exceeded cash for the first time.

The first contactless payment was made in 2007. In the same year, Western Union announced its partnership with GSMA to develop mobile money transfers. Still, in 2007, Safaricom, Kenya’s largest mobile carrier, launched M-Pesa. This innovation allowed Kenyans to send money from one place to another using their mobile phones replacing the use of banks for money transfers. Currently, M-Pesa is the most used mobile wallet in the country. In 2009, bitcoin version 0.1 was released and the first transaction took place.

2011 and Beyond

In 2012 the mobile payments were at 163.1 billion. In 2014 apple pay was introduced in both the UK and US. It is expected that the debit payments will be at 12.5 billion by 2020.

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