The rise of the digital payments era has been nothing short of meteoric. From its birth in the early 90s to its dominance today, we have reached the stage where it is almost impossible to fathom a world in which digital payments didn’t exist.
As the use of physical cash continues its decline, digital payments continue to strengthen its iron grip on the financial transaction environment, offering users a greater level of speed, safety, convenience, and efficiency than cash ever could.
The history of digital payments is quite recent, making its development all the more remarkable. Let’s take a brief look at its evolution.
A web of opportunity
It’s safe to say that the introduction of the internet opened up a realm of opportunities that had never been dreamed of before. The launch of ARPANET back in 1966 laid the technical foundation for the internet as we know it today.
While the platform existed in the mid-1960s, it was not until the late 1980s when we started truly noticing the internet’s potential.
In 1989, Tim Berners-Lee devised a system of pages and sites which could be connected by hyperlinks, effectively paving the way for the realization of digital payments.
Taking things online
The mid-1990s saw the introduction of online payments. The Stanford Federal Credit Union is credited as the first organization to offer their clients an online payment system, having first done so in 1994.
Legend has it that the first-ever online purchase was a pizza from Pizza Hut! Several corporations soon followed suit, with digital payment giants Millicent and Ecash launching in 1995 and 1996 respectively.
These corporations specialized in supplying electronic cash alternatives, such as digital cash, e-money and tokens. This period also saw the birth of another e-commerce company: a little corporation called Amazon.
The PayPal era
In 1998, Elon Musk, Peter Thiel, Ken Howery and several other investors founded a company called PayPal. PayPal, considered to be one of the first companies to specialize in online payment systems, became a game-changer in the online payment environment.
The company’s system became wildly popular with eBay users, the online auction firm. As PayPal continued to push the boundaries with innovative solutions such as making payments using email addresses and mobile payment apps, eBay launched its online payment service called Billpoint to ring-fence their clients and rival PayPal.
However, Billpoint never gained much traction with users. eBay eventually gave up on Billpoint and purchased PayPal in October 2002. As the saying goes, if you can’t beat them, acquire them.
Payments for a digital era
The rapid growth in online shopping, banking and other services, combined with technological advancement, has resulted in a massive increase in digital payments across different devices, especially mobile devices.
According to Statista, there were approximately 950 million mobile payment transaction users worldwide in 2019. This number is expected to climb to an astounding 1.31 billion users by 2023. It makes sense then, that more and more companies are seeking to jump onto the bandwagon.
Many large firms have established their payment platforms in one form or another, offering safe and convenient methods for clients to purchase their goods and cementing their place in the history of digital payments.
In a world where instant gratification is everything, the speed, safety and ease of these digital payment platforms go a long way in enhancing the customer’s experience when transacting with the firms.
What’s in your wallet?
Mobile wallets are all the rage these days. Interestingly, this is not an entirely new concept and as far as the history of digital payments goes, Coca Cola is credited with launching the first type of mobile wallet as far back as 1997. They piloted the idea with several vending machines in Helsinki, where customers could purchase their soft drink from one of these vending machines and pay via a text message from their cellphone.
While the concept was innovative, it didn’t become mainstream until Google launched Google Wallet in 2011. This seemed to open the floodgates and, by 2015, both Apple and Samsung, along with a host of other corporations, had launched their own digital wallets.
Today, many top organisations, from American Express to Walmart, are offering customers the opportunity to use digital wallets. The benefits, for the most part, are quite obvious: digital wallets offer a safe and convenient method of making payments from the comfort of your chosen device. Expect to see further growth in this arena.
Writing the history of digital payments
As consumer needs continue to rapidly evolve, expect to see payment platforms constantly changing to meet those needs. In addition to the growth of digital wallets, cryptocurrency will most likely represent the next evolution in the transactional payments space.
As people continue to gain a better understanding of blockchain technology, there’s no doubt that, sooner rather than later, it will transform the digital payment environment in new and exciting ways.
Mobile wallets are certainly set to become as common as cash payments once were. Solutions such as UBU’s Mobile Wallet which enables customers to fund their wallet via card or EFT and use their wallet to shop at thousands of vendors while receiving cashback rewards directly to their wallets are just as groundbreaking – establishing our own space in the history of digital payments.
To learn more, read our recent article about the secure, rewarding online shopping experience that solutions such as UBU’s mobile wallet offers.