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Payments through the ages

Published 29 07 2020

 

 

Payments have come a long way since the barter system where there was no standard measure for valuing goods, and negotiating prices were a norm.

Although there are still societies where negotiating prices is a way of life, money now has standardised units of measure. But this took centuries to develop. As Table I highlights, while the system of money was introduced in the UK in the 8th century, the first printed bank note did not appear until 1855.  It took another 111 years before the credit card was issued, and 30 years beyond that the first internet banking service was introduced.  

Today, innovations are occurring at a faster pace. Looking at Table I, we see that chip and pin was issued in 2003, four years later came contactless payments, and just one year after that, the UK introduced faster payments.  Even the instruments we use to make payments are evolving. While, the first phone capable of browsing the internet was introduced just 21 years ago; today around 8 out of every 10 adults own a smart phone, which continues to revolutionise how we make and manage payments. There are also smartwatches, QR codes and virtual assistants helping to administer how we pay.  

Still, the demand for instant, less costly, and frictionless means of payments continue to grow; and Fintechs are working on varying technologies, including use of artificial intelligence, to meet these needs.  And there is more to come. The UK has committed to the development of a new payment architecture which aims to provide a foundation for FinTechs, banks and other providers to innovate and enhance payment products. So, what will the next big revolution in payments be and how rapidly will innovations continue to evolve?  Join the PSR discussion now. 

Table 1: Payments Through the Ages 

8th Century 

Introduction of the system of money.  

Minting of the earliest English silver pennies - 240 should add to a pound  

 

1489 

The first pound coin appeared. 

 

1504 

The shilling was first minted. 

 

 

1560 

Gold coins emerged in 1560 

 

 

1572 

Copper coins appeared. 

 

 

1659 

Handwritten cheque drawn-Merchant use only.  

 

 

1694 

Handwritten banknotes were issued. 

 

 

1728 

First Overdraft given 

 

 

1793 

£5 notes issued by the Bank of England 

 

 

1797 

£1 and £2 notes issued.  

  

 

1855 

First fully printed note.  

 

 

1881 

 

Postal orders first introduced allowing people who didn’t have a bank account (or cheque book) to buy things by post.  

 

 

1966 

First credit card issued. 

 

 

1968 

Bacs direct debit and credit 

 

 

1971 

Decimal system stopped use of pounds, shillings and pence. 

 

 

1984 

Chaps same day settlement or Real Time Gross Settlement system introduced.  

 

 

1985/86 

LINK cash machine network established 

 

 

1987 

The first debit card launched- magnetic stripe  

 

 
1996

Real Time Gross Settlement system introduced

 

 

1997 

The first internet banking service was introduced  

 

 

2003 

Chip-and-pin cards issued  

 

 

2007 

The first contactless debit cards introduced. 

 

 

2008 

Faster Payment systems launched. 

 

 

2013 

The world’s first economic regulator of payments, The Payment Systems Regulator, was officially created becoming fully operational in 2015.

 

 

2016 

The Bank of England announces plans to build the next generation of the Real Time Gross Settlement system at the centre of UK payments 

 

 

2017 

A conceptual design for the modernisation and future-proofing of the UK’s retail payments infrastructure – the New Payments Architecture - is revealed. 

 

 

2018 

The first licensed Payment Initiation Service Provider (PISP) completed an end-to-end transaction using Open Banking Application Programming Interfaces (APIs).  A PISP initiates digital payments on behalf of the user, directly from their bank account, offering an alternative to the use of a card.