The Ever Changing Face of Payment

The history of money dates all the way back to 350 B.C. Even Aristotle had something to say about it! Although financial exchanges had evolved with civilisation, the fundamentals of money have never really changed. Financial exchange has always concerned carrying out transactions and exchanging one thing, for another. That is, it has always involved payment for a good/service.

Bartering as Payment

The earliest transactions involved each party exchanging resources and services for the benefit of the other. This interaction was known as bartering. Essentially one good deed was met with another. Payment then evolved into the exchanging of livestock for other goods and services. This is considered the oldest form of currency, and laid the groundworks for future changes.

Introduction of coinage

Skipping a few thousand years (no big deal), and payment had evolved again. Barter transformed into a medium of exchange. This involved the exchange of shells and metals, as a promise for future goods. Gold and silver coins were first used in ancient Lydia (modern-day Turkey) and the Greek cities. On these coins, profiles of the gods and emperors of the time were stamped to give legitimacy and avoid fraud. Nowadays, small shrapnel and coins are generally just seen as pocket change. (However, they can be used to help teach young children about financial literacy).

Jumping forward a few hundred years small coins were beginning to be surpassed by other styles of payment. Leather money, made mainly of white deerskin and what can be considered the earliest prototype of banknotes. This was closely followed by paper money. However, the balance of production and inflation meant that this type of money was soon fazed out, leaving a gap in the market for a new legal tender, which was filled in Native America by the wampum in 1637.

Gold standard

After 200 years gold is officially made the standard of value in England. This was then met by the gold-backed U.S. Dollar in the 1900s. By the 1950s the introduction of the credit card too payment another leap forward.

Digital currency

Today we have technology driven payment. Credit and debit cards have slowly replaced the need for physical coinage. With the pace of change in the U.S. payment market showing that over the past five years the credit card has proved itself to be the generally preferred method of payment, merchant services (services that deal with technology driven payment) are ones that must be optimised if a business owner wishes to retain custom. As well as this, shopping from smartphones and tablets, otherwise known as mobile commerce, is expected to hit $114 billion in 2017, meaning that that, which was first introduced in 1994, shows no sign of slowing down.

Who knows what the next form of payment will be? Can it evolve any further than it already has? It’s hard to see it ever being able to, but that’s probably what those of past generations were saying about the animals, shells and deer skins that they were using to exchange!