History of Money and Payments

History of Money and Payments
People have engaged in commerce to exchange goods and services for payment throughout the ages.
by Square Mar 14, 2019 — 5 min read
History of Money and Payments

People have engaged in commerce to exchange goods and services for payment throughout the ages. These financial transactions did not always involve monetary payments. There was a time when standard money did not even exist and people utilized other forms of payment to perform transactions. With the evolution of technology, money and payments have changed drastically. Current credit card processing technology and advanced business solutions make financial transactions possible at almost any time and virtually any place.

Bartering and Livestock

Bartering was an advantageous way to exchange goods and services for people many years ago because it enabled both parties to get what they needed. For example, two parties might exchange tools for services to fulfill the needs of both people. Livestock was also considered wealth that people could amass. The more cows or sheep someone owned, the wealthier they were.

Precious Metal Coins

Ancient civilizations used to use beads and shells as coins. Eventually, they began using precious metals to make coins. People in the ancient civilization of Lydia were among the first to use coins made of gold and silver. This currency was both valuable and easily portable.

Leather Money

Leather was another material used for currency. People in ancient China utilized white deer skin for banknotes. The notes were large compared to the bills used in today’s society. Leather money could have been as large as one-foot squares of deerskin.

Paper Money

Eventually, the Chinese developed paper money. Civilizations struggled with determining and maintaining the value of paper money. In addition, challenges came in the forms of both inflation and the production of the currency. Paper money went in and out of use during periods of ancient history.


England established gold as its standard of value in 1816. Following this event, Europe began backing bank notes with the gold standard. This meant the value of any currency was set by establishing its value in gold. The United States followed suit in 1900. Before this time, both gold and silver were used for dollars.

Gold-Backed U.S. Dollar

In 1913, the United States established the Federal Reserve system. This official central bank served the financial interests of the nation. Federal Reserve notes were backed by gold at this time. One of the roles of the Federal Reserve was to ensure that notes and checks would be honored and could be redeemed for gold.

Credit Cards

Consumers began enjoying credit from retailers during the 20th century. Some retailers, such as department stores and gas stations, began creating individual credit cards to issue to consumers. These cards were created to make spending money more convenient for people. Diners Club was the first actual credit card, which gave consumers the ability to purchase meals from several restaurants located in New York City. 

eBook Exploring today’s evolution toward the future of payments

Exploring today’s evolution toward the future of payments


U.S. Dollar

In 1933, the United States discontinued the gold standard to keep Americans from cashing in their currency for gold, depleting the national gold supply, amid worsening deflation. From this point forward, the federal government became the official backer of the monetary system instead of gold. However, the U.S. continued to let foreign governments trade dollars for gold until 1971. At this point, the country became concerned that foreigners would sap the national gold reserves, leading to an end to this practice.

Online Shopping

With the rise of the Internet during the 1990s, online shopping arrived on the scene. Consumers embraced the ability to peruse the Internet and make purchases. Common historical data suggests that Pizza Hut may have been one of the first retailers to execute an e-commerce transaction. The company began allowing people to order pizza on its website as early as 1994.

Mobile Payments

Coca-Cola receives credit for offering the first mobile payment transaction in 1997. The beverage retailer created special vending machines that enabled consumers to pay for their drinks by sending text messages from mobile devices. Since this time, mobile payments have skyrocketed in popularity. Now, more people than ever before are paying on the go, and more merchants can accept payments anywhere, without being tied down to a cash register.

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