“Cowries, Cash & Credit – The History and Future of Payment Processing” Series 2 of 4

The History (and Future) of Payment Processing – Part 2

In our last blog, we looked at the history of money and payments from bartering to Gold and cash. Things changed drastically over a 2000 year time. When cash was introduced, the way humans thought about currency and exchanges changed as well. In part two of our series, “Cowries, Cash & Credit - The History and Future of Payment Processing,” we embrace the idea of cash and are introduced to the piece of plastic that changed the way we all do business.

From Cash to Cards

In 1913, the Federal Reserve System was created in the United States, establishing a central bank and creating gold-backed, federal reserve notes (U.S. dollars). That type of paper currency was used for about 60 years when the U.S. dollar, as we know it, was implemented in 1971. It may be hard to believe, but we didn’t see the cash we use today until the ‘70s. But, what’s even more interesting is the fact that charge cards were actually introduced in the 1920s! Department stores, hotel chains and gas stations started providing these charge to customers with cars so that they didn’t have to travel to their hometown bank.

Remember, the nature of payments has always been transactional.

However, this transactional nature of payments has always featured a few constants. For example, ever since 1946, when Brooklyn-based banker John Biggins introduced the ‘Charg-It’ credit card, the payment transaction has always featured some sort of authentication process that allowed merchants to verify the identity and financial viability of consumers. In those early days, this was a manual, administrative process that sometimes took weeks.

Even in 1950, when the wonderful world of credit cards came to us, the authentication process was a tedious one for merchants. But we continued to move forward with new ideas in the payment realm. If you don’t know what the first credit card was to make an appearance in the U.S., you’re not alone. The Diner’s Club card was made of cardboard and it could be used in only 20 restaurants in the New York City area. Now you know the answer to that trivia question, if asked.

After going off the gold standard in 1971, the U.S. then adopted the current US dollar. (After paying for the Vietnam War, and expanding social programs, inflation was on the rise and the gold standard became severely outdated).

In the payment processing world, ‘outdated’ is unacceptable. We continue to move forward to help make consumerism easier and more convenient for merchants and customers. For example, we saw the introduction of on-line shopping in the mid-1990s and the first mobile payments in 1997.

Can you imagine, today, not being able to pay for something on-line with plastic?

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We’ve reached the 21st century in our look at the history of payment processing. In just the past decade, many innovations have taken place to simplify payment options. In part 3 of the “Cowries, Cash & Credit – The History and Future of Payment Processing” series, we take a look at innovations happening right now – Apple Pay, Google Wallet, Samsung Play and what to expect.

If you have questions about the services we provide or you have a topic you would like to see covered in my blog, feel free to reach out!

Zach Allen Regional Vice President at Chosen Payments
Credit Card Processing | ACH | Gift/ Loyalty Cards | Mobile & Ecommerce Payments | ATM
Toll Free: 1.855.424.6736 x. 116
zach.allen@chosenpayments.com  |  www.ChosenPayments.com 
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