Remember When…Cash Was the Way to Pay

The Evolution of Financial Transactions

By Paula Green

On November 12 last year, a landmark moment arrived as the United States Mint ended penny production. These tiny coins, costing about 3.69 cents each to make and distribute, jingled in pockets for 232 years before taking their final bow, saving taxpayers nearly $56 million annually.

When you think back, pennies aren’t really the only monetary entities that have gone by the wayside. There have been times when I went to buy something, and I asked, “Do you take cash?” I never thought I would be asking a “silly” question such as that, but here we are!

Buying everyday things has changed a lot over the years. Wiring money became popular in the 1870s, thanks to the Western Union, which used telegraph networks to send money quickly over long distances.

Checks, like the ones we use today, started in the 11th century but didn’t become common until the early 1900s after the Federal Reserve Act of 1913. Checking accounts became popular after World War II. Personal checks grew in use until the mid-1990s, when credit and debit cards took over. Since 2000, check writing has dropped by nearly 75%.

Diners Club introduced credit cards in the early 1950s. Since their inception, these plastic necessities have become a cornerstone of the American economy. In 1969, a magnetic strip was added as an additional layer of protection. 

In keeping up with the times, Diners Club created the first rewards program, Club Rewards, in 1984. The EMV (Europay, Mastercard, and VISA) chip technology was launched in 2010. This engineering concept uses a tiny, powerful chip embedded in credit and debit cards to enhance card transaction security.

Another handy banking tool is the ATM (automated teller machine), which first appeared on June 27, 1967, at a Barclays branch in north London. Just over two years later, on September 2, 1969, Chemical Bank installed the first ATM in the U.S. at its Rockville Center branch in Long Island, New York.

Online banking started in the early 1980s with basic telephone and videotex systems, but modern internet banking really took off in 1994 when Stanford Federal Credit Union launched the first real online website.

In 1999, PayPal launched a platform for sending money. It became famous after eBay bought it in 2002. After that, PayPal grew worldwide and was accepted by many online stores. Today, it’s one of the biggest online payment processors in the world.

Google launched its first mobile payment system, Google Wallet, in 2011. It used NFC (near-field communication) to let users store credit cards. Android followed in 2015. In 2018, Android Pay and Google Wallet combined to become Google Pay, offering a simpler payment experience. Apple Pay started in the U.S. on October 20, 2014.

Venmo was established in 2009. This mobile payment app lets users send money to others using their phones. The only requirement is that both the sender and receiver live in the United States.

Gift cards remain a favorite way to shop. Whatever payment method you pick, choose wisely, and remember, it’s always perfectly fine to keep the cash flowing!

Sources: home.treasury.gov/news/featured-stories/penny-production-cessation, checkeeper.com/blog/history-of-checks/, financesonline.com/from-paper-checks-to-digital-transfers-the-evolution-of-bank-transactions/,www.americanbanker.com/slideshow/the-evolution-of-the-atm, www.checkout.com/blog/evolution-mobile-wallets