Tracing its way back to the 50s, was when the first-ever cashless payment took place. Though India saw the onset of cashless transactions pretty late, the world had already started accepting this mode of payments much before us. Back in the day, the options were limited and so was the usage. People were not very keen and didn’t really want to do the give and take through a system that didn’t involve cash. Their behaviour was very much justifiable as
- The cashless system involved their hard-earned money.
- The entire process and system was extremely complicated back then.
Fast forward to today, we see a large part of our daily activities majorly dependent on cashless transactions. But it took a lot of years and strenuous revisions in the system to come up with something seamless, secure and reliable. Developing a secure payment system was a challenge of the past which the world seems to have tackled pretty well.
The evolution of digital payments has been that of numerous upgradations and convenience focused systems. Now multiple players in the market are taking care of the financial convenience aspect of consumers.
As we are talking about payments which equals cash, it is very much apparent that it all started with the banks. A conventional bank of the past was just about deposits and lending. As the needs of the consumers evolved the banking business caught on the wagon and we saw them entering into investments and insurance, which usually were products offered to their customers by a 3rd party. The situation was a big win for both the parties as the customer now got his required services at the footstep of the bank and banks got to generate more revenue.
PLASTIC MONEY 1950s:
The history and evolution of Payment cards have been a really extensive one! Dating back to the 50s was when the first-ever credit card payment took place. A general-purpose credit card was issued in 1958 by the Bank of America. It was initially made out of paper but later they upgraded it to a card similar to what we use today. Later on, other companies like Barclays, London and Llyods Bank also issued bank cards in 1969 and 1972 respectively. Credit cards were the first-ever revolution in the history of payments that initiated a cashless mode of payments.
Recently there have been certain studies carried out to measure the success of credit/debit cards as the economy has progressed. According to certain studies, payment cards have helped in the efficiency of payments while maintaining a transparent transaction history.
The electronic card payment system has furthered adding more value and cleaner business proceedings to all the aspects of the business ecosystem, including consumers, merchants and the government.
ONLINE BANKING 1990s:
The advent of online banking began in the 1990s with the availability of internet. If not for the origination and development of the internet we would have been far from making progress in the space of digital payments.
Online banking changed the entire scenario of financial services. Today we are far from the brick and mortar banks. We don’t need to be physically present at a bank to carry out various banking services as everything happens at our fingertips.
Stanford Federal Credit Union was the first-ever institution to initiate online banking. However, the system back then wasn’t very must efficient and user-friendly and required a special understanding of the system.
The millennial generation is the flag bearer of online banking further driving its usage to an optimum. Activities such as sending money, withdrawal of cash, checking account balance has only been possible due to the presence of a robust online banking system.
TELECOM COMPANIES 2007:
Later we saw telecom companies dive into this space with m-pesa a Kenyan innovation by Safaricom-Vodafone’s subsidiary. Like any other digital payment system, this one was also started to fulfil people’s needs in a convenient non-stressful way. This system was more like a direct mobile to bank connection since we are talking about 2007 when the mobiles weren’t very much app-based and smartphones hadn’t reached a wide population. Telecom companies later scaled up this system of payments through new ventures like mobile wallets, payments bank licenses along with insurance amongst the other services.
Now, after almost, more than 5 decades we have tech platforms with most of them entering the financial technology space. Business giants like Apple, Google and Facebook coming up with offerings like Apple Card, Facebook Pay and Google’s partnership with banks has a lot to explain about people’s reliance on digital payments and that they are here to stay.
Digital payments have transformed the way the retail industry has been functioning and has bought a bouquet of benefits to the consumers and businesses alike.
Amidst all the evolutions that the cash economy has progressed through, India made it possible to develop a system that would help in making real-time payments at the drop of a hat. Unified Payments Interface, commonly known as UPI was developed by NPCI- National Payments Corporation of India in the year 2016. It has enabled inter-bank transactions on a real-time basis which has extensively facilitated the use of a digital payment system in India. Multiple bank accounts can be linked to a single app, and any UPI client app can be used to carry out transactions.
We have come a long way in developing a disruptive technology in the space of digital payments. However, the future of digital payments lies in further optimising safe and secure user experience.
Keeping the user at the centre of development is going to be a vital step from hereon, rather than focusing on profitability. Hence, the user’s needs are to be addressed first and desirability should be the prime consideration before we come up with a new technological offering to ease out the digital payment space.