Timeline: Currency, Credit and Commerce

Consumers have always searched for a convenient, universal method to declare the value of goods or services. The earliest recorded currencies date back thousands of years. Early civilizations used pieces of metal to represent values of goods being traded. Over time, weighing specific metals and stamping a coin in a determined value evolved. As this practice spread, coinage and banking became a global practice to facilitate trade.

During the 17th century, paper currency in the form of banknotes came into widespread use as a more convenient way to carry large sums of money. In the 18th century, the bank draft was invented by the Bank of England, as a means of settling debts without an open exchange of currency, and evolved into the checks in use today. Prior to the 1940s, having “credit” meant that a merchant would allow a good to be bought without immediate payment, and a bill would be settled at a later date. To find a more convenient way to sell gasoline, the first credit cards were issued by individual merchants, though a system of universally accepted credit was not available until the 1960s. In the 1970s, electronic processing resulted in credit cards with magnetic stripes and the transactions that are a ubiquitous part of daily life in developed countries. In 1999, the first internet payment processors emerged, allowing payments that required neither currency, check or credit card. Instead, the trend turned to sending payments to email addresses funded from electronic bank drafts.

The Change of Commerce

Payment options have continued to evolve over time to be easier to carry, widely acceptable and easy to use. As payment options have evolved, merchants have accepted each change. Checks were accepted to allow consumers to buy more, without having to carry large amounts of cash. Credit card transactions replaced checks when the high rate of check fraud became a concern for merchants. Consumers benefited from the convenience of a universal line of credit. Today, browser histories have many eCommerce website examples, the latest development in simple business transactions. Now an exchange of payment for goods can occur without the merchant and consumer ever meeting. No credit card is swiped, no physical signature required. This convenience is spreading to physical businesses as well. Many merchants no longer accept checks, and a few are rejecting cash in favor of electronic transactions. Consumers are accepting these changes, and many no longer carry checks on a daily basis. A growing number of consumers no longer carry large amounts of cash. Younger consumers who grew up with the convenience of electronic transactions may not even carry cash at all, opting for credit card or internet payments.

Recently, currency has been changing again, with smaller denomination coins being recalled or changed. Many currency only vendors do not like to manage small change, instead using electronic transactions for precise values. However, it is unlikely that hard currency will disappear in the near future.