Throughout history, payment methods have always been in constant evolution. However, in recent years, they have multiplied at an increased speed and transitioned into the digital world. New online payment methods have revolutionized the way we purchase items and do business, making transactions instantaneous and more reliable than ever. Join us as we go over some of the key moments in the history of modern payment methods.
Origins …
Ever since cards began to emerge as payment options in the late 1950s and the first ATMs were established in the 60s, banks and financial institutions decided to heavily invest in developing new electronic payment methods. As a result, cards with magnetic stripes and electronic transactions emerged and payment card networks became global.
In the 1990s, when the internet first opened up for commercial use, companies were quick to invest in online purchases and, as a result, they founded a new way of purchasing services and utilities. This new type of commerce, commonly known as e-commerce, exceeded all expectations and soon became an instant sensation.
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Online payment methods
The rise of online commerce was fast. When in 1995, Jeff Bezos launched Amazon.com, it was hard to imagine that the company would only take two years to reach the one million customer mark. In fact, it was the success of Amazon that inspired the rise of digital wallets. It was only three years after Amazon’s initial launch, that Paypal, a new and innovative service that allowed anyone with an email address to register, send and receive money electronically from other users, was launched.
Twenty years later, the virtual wallet industry has developed even further, with mobile services such as Apple Pay, gathering users’ payment information and being able to perform contactless payment operations. This type of payment method has been increasingly popular, making purchases and transactions more convenient and secure. As a result, all types of services have been trying to keep up with the current trends and there are now countless e-commerce stores, streaming platforms, and casinos accepting Apple Pay as a reliable payment method. These systems use NFC technology to replace credit and debit cards in POS terminals enabled for wireless communication, with the addition of a second authentication factor via biometrics (touch ID), PIN, or password.
Emerging payment methods
Following the popularization of contactless payment methods, several tech companies and banks incorporated this technology into wearables, expanding the universe of mobile payments far beyond smartphones and POS terminals. For instance, British multinational bank, Barclays, amongst other financial institutions, launched wristbands, fobs, and stickers which incorporate chips that allow users to make all types of purchases.
At the same time, while all these types of innovative payment methods were emerging, there was also a new type of currency in the works. Cryptocurrencies, or digital currencies, have existed for about 20 years, but only recently did they evolve into a massive product capable of revolutionizing the financial landscape of markets. This new type of currency was created with the practical purpose of establishing a peer-to-peer electronic cash system that allows payment to take place without the intermediation of financial institutions. In recent years, cryptocurrencies, such as Bitcoin, Ethereum, and BNB have come to be valued at thousands of dollars and have entered several financial markets. Companies such as Tesla now accept cryptocurrency as a payment method, while El Salvador became the first country in the world to accept Bitcoin as a legal tender.
From atoms to bits, the digitization of payment methods has been moving at an incredible speed. As a result, it is easy to understand why many financial experts believe that physical currencies could be coming to an end or at least can become a less meaningful part of financial transitions. However, the ultimate goal is always to make transactions and purchases safer and faster.
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