Evolution of payment system.

 

What is PAYMENT ?

A payment is the voluntary tender of money or its equivalent or of things of value by one party (such as a person or company) to another in exchange for goods, or services provided by them, or to fulfill a legal obligation. The party making the payment is commonly called the payer, while the payee is the party receiving the payment.

i.e. the act of paying somebody or of being paid. 

A payment can be made in the form of services exchanged, cash, cheque, credit card, debit card or cryptocurrencies etc.

Evolution of Payment System:

1. Barter system
2. Cash payment
3. Cheque payment
4. Online payment
5. Digital payment systems (i.e. Mobile, E-Banking...etc.)

What is Barter System?

A barter system is an old method of exchange. This system has been used for centuries and long before money was invented. People exchanged services and goods for other services and goods in return.

Advantages

1. It is a simple system free from the complex problems of the modern monetary system.
2. The problems of international trade, like foreign exchange crisis and adverse balance of payments, do not exist in the barter system.
3. Personal and natural resources are perfectly utilized to meet the requirements of the society without involving any wastage.

Disadvantage

A complication of bartering is determining how trustworthy the person you are trading with is. The other person does not have any proof or certification that they are legitimate, and there is no consumer protection or warranties involved. This means  that services and goods you are exchanging may be exchanged for poor or defective items.