In the era when we can make payments by merely texting it is worthwhile to take some time and think about how far we’ve come. In fact, by looking at the evolution of payment methods, we can draw some interesting conclusion about lifestyle changes and trends.
The only constant in this story is that people always wanted to keep their money as safe and accessible as possible. From ancient Sumerian banking to conversational payment, here are the milestones of personal finance.
As early as 1700 B.C. the Code of Hammurabi unveils the existing of banking practices that are comparable to modern counterparts, including deposits, loans, letters of credit and charging interest. Clay tablets used by these civilizations could be considered the first forms of checks. Of course, the safety elements on these early payment forms were easily forged, and the clay tablets were not convenient to carry around. This is why coins were more popular and widespread. Inspired by the Mesopotamians, the Greeks and Romans created lending systems and banking relations that still serve as an inspiration for modern practices.
From Medieval Europe to the Emergence of Modern Banking
The medieval Crusades created the framework for the emergence of a banking system, although some religious beliefs like Christianity and Mwere opposed to interest. The need to move money between broad geographical areas without the risk of robbery stimulated the introduction of a demand note, much like a check that would be paid at Templar’s castles in local currency.
The Venetian trading took this concept even further, but it was the merit of the Dutch cashiers who invented the payment note, a way of writing and depositing cash. The idea was taken by the British and spread in their vast empire.
These instruments were easy to carry, but also to forge, so there was some public resistance in adopting them.
The 20th Century
After the Great Depression, there was an explosion of financial institutions. The competition between these was fierce, and it led to different marketing techniques such as offering a gift when opening a savings or a checking account. This is how banks ended up giving free toasters, and it was the start of current loyalty programs, which include airline miles or Disney discounts.
The icon of these times is the checkbook, and a relevant image would be that of a long line at the bank counter every month, on the payday. The check was the only way to move money from your account to the holder of the paper. It was the symbol of an era of trust and slow movement when people had confidence and time.
The introduction of plastic cards, both debit, and credit, marked a revolution. Transactions became instant. Through ATM and POS points any payment could be processed on the spot, although some fees might apply. Having a plastic attached to your checking account makes the checkbook redundant.
As the card replaced the checkbook, we can now wonder what will replace the card. The answer lies conveniently in our hands or pockets. The smartphone can be loaded with payment apps for which the card remains as a link between the user interface and the bank, a bridge between the old and the new. The rise of chatbots is taking the digital payments to a new, conversational level. Now you can even send money through Facebook messenger. This shows a need for extreme simplification, coupled with the security offered by the platforms. The only constant is the need for a checking account where to keep the money to be distributed. But who offers the best checking accounts?