New forms of payment that change the way we shop
If we are looking for a formal definition, money is everything of value that can be clearly identified and is generally accepted to pay for goods, services and debts on a market. Although the history of money, with its most popular portrait in coins and notes, starts around the 7th to the fifth century BC, the first officially recognised payment system was bartering.
This kind of “I give you, you give me” not only incarnated a way to ensure that both parties would benefit from what they were exchanging, but also generated added value that today has become the mainstay of successful companies and institutions: confidence. The same confidence that made these round objects made of precious metals conquer the world from the seventeenth century, and an apparently simple piece of paper the best allies for all kinds of fast payments.
But it wasn’t until the twentieth century when money in general and payment methods in particular underwent their second large revolution (the first, as we said, was the change from bartering to money). We have to go back to a date that was not very positive for the history of mankind, 1914, the start of the First World War, which nevertheless served to introduce one of the great innovations (who hasn’t heard of Visa, American Express or MasterCard?) that more than a century later is still firmly in circulation: the credit card.
It was Western Union that created a card for its more select customers, which not only afforded them preferential treatment, but also gave them a charge-free line of credit. Their wager had a domino effect.
Until the end of the 1940s, a large number of companies began to issue their own credit cards, aware of the success of this firm from Colorado, but which were only valid in their establishments, as a means to bring in customers and facilitate credit purchasing.
This concept evolved into credit cards as we know them today: the cards that can be used to pay anywhere, any amount and securely. This is where we really find the cause of the discussion around questions like the data privacy so widely mentioned when talking about emerging technologies such as Big Data, and the eternal dilemma between freedom and security.
In this sense, the banks played a fundamental role in convincing customers that paying by credit card was not only equally secure as the traditional cash payment, but that it was even better, as it gave customers the benefits that cash could not. This is so much so that in Spain, where the first card was not issued until 1978, almost 80% of the population uses them and it is the second country of Europe in terms of the number made. Confidence was once again the star of this financial stage.
The revolution starts in the Smartphone
If the credit card was a before and after in the way of understanding the payment ritual, technological evolution has also led it to expand with new advantages, such as paying by simply approaching the trade’s sale point terminal in something known as contactless. This technology has now gone over to the Smartphone, the great actor of the last decade, which has changed the way users relate not only with their finance, but with the world in general.
However, it is not the apps that have made the smartphone something more than a mere instrument for paying. The new generations of digital natives are “multitask”, like Steve Jobs’s iPhone. In fact, if the genius from Silicon Valley managed one thing, it was to make digital culture a product of portable consumption contained in design gadgets. These are apps: small games that do something more than entertain, and in the case of finance, they become the clear dominator of the domestic economy.
"Twenty-first century society is digital and has democratised the way in which people make their payments"
Important platforms have appeared in this scenario, such as OnePay, which allows international transfers to be able to be made faster between individuals, as they very often reach their destination on the same day or the next, and customers know the exact amount that will arrive in the receiver’s currency before the transaction is confirmed. But if there is anything that makes this new service truly innovative, it is its Blockchain technology, which as well as coming forward as one of the great changes of the international financial paradigm, also acts on the social level.
As the expert Francisco Vera says, “with Blockchain we can lend money with two anonymous addresses; the Internet validates the transaction, makes sure that it is performed and the whole community can see the details (…) Can you imagine an NGO in which you can see what amount of your contribution has actually reached the Third World and what has happened to the rest? This is now possible”.
These reflections are also closely linked to the concept of capital that the Economist and specialist in economic inequality and income distribution, Thomas Piketty, details in his book ‘Capital in the 21st century’, when he says that, “Capital is not an unchanging concept. It reflects the state of development and the social relations governing a certain society, the border between what may or may not be owned by private individuals is evolving immensely in time and space”.
Other applications that are also the talk of the town are Bizum, which allows payments to be made between mobiles, without account numbers in the middle and with the option of doing it by voice thanks to the Siri function; or everything encompassed by the so-called Wallets, which have sped up the payment methods by doing away with the obligation of always carrying a credit card.
The truth is that neither physical money nor credit cards have disappeared, but the apps have not generated the distrust that other technological changes have in the past. This is a sign that the technological world is advancing alongside the human.
Twenty-first century society is digital and has democratised the way in which people make their payments (in the sense that they can be made with a click), whether they be digital natives or the so-called millennials, or those who were born after the digital boom. Nobody is being left behind.