In our rapidly changing world, everything happens online. We don’t know how we got here, but, at last, we are here. Well, to an extent, we can trace back our steps and understand what brought us here. The last 150 years show us an evolution in the payments or otherwise known as the money transfer industry. To our surprise, there still hasn’t been a dramatic change in the global payment landscape as much as the rise in payment volumes demands. Let’s look at how different solutions in history contributed to our present situation.

Money has, in some form, been part of human history since the last 3000 years. For the most part of history, banks and financial institutions have existed alongside with money. However, it was when our world moved towards industrialization and globalization that we were witnessing a completely new form of money transfer. It was at this point in history when the first wire transfer took place.

Wire transfers originated in the 19th century and since then they have become one of the most successful methods of transferring money across the world. The popularity of the wire transfer gave birth to several private companies offering the same service but without the banking environment.

A few of these companies are still in existence from that era, such as, Western Union, a formal telegraph service turned financial services company that now offers a multitude of services. Currently, Western Union is one of the biggest money transmitters in the world. Its main service, wire transfers, are similar to what a bank wire offers. However, instead of waiting for several business days, the customer pays a premium for an instant transfer. These transfers became possible due to the advancements in telecommunication technology and at the same time, the payments sector was entering a new era.

It was a breakthrough in money transfer history. This transition or more commonly known as, an electronic funds transfer (EFT) would change everything in the payments landscape. ATMs (Automated Teller Machines) were introduced at this point in the course of history. Financial institutions started processing payments electronically rather than with checks or cash. The development of electronic payments saw an exponential rise. Everything was looking like a new breakthrough in the making. That’s what evolution does.

In the 1920’s, companies such as Western Union and later oil companies started to issue credit cards. At this time, credit cards were pretty basic and were printed on cardstock. Visa credit cards weren’t around until 1958 and MasterCards came out in 1966 and by the early 1970’s, Americans had over 100 million credit cards. The world accepted credit cards without many inhibitions. Fast forward a few decades, the Internet became mainstream, and every household in the US had a computer with a modem connection.

For the first time in history, humans were experiencing a virtual world that was also similar to their real one. However, goods and services, along with payments, had to be present to bridge these two worlds. The dramatic rise of e-commerce in the next years would create a heavy demand for money transfer solutions in the online world. To adapt to the times, MasterCard and Visa added the security code on the back of their credit cards. Others, like PayPal, created solutions specifically designed for the internet and acted as middlemen between consumers’ finances and the receiving party. Since the adoption of the Internet we are now able to have online banking and payments done through an email.

The digital age is the present and here we are right now. From this vantage point, everything looks hazy and sudden, but this was just the natural progress of events in the money transfer business and more will come. What do you think?





