The Evolution of Payments

Throughout history, payments have always determined the speed and efficiency of the free exchange of goods. They are the motor of our evolution. As we learn about their history, so to do we learn about how we can move further.

Payments are how the economy leaps forward. The transfer of value is something that humanity has been refining since currency exists, and the earliest forms of payment processing tools were little more than scratches on bone.

Fig. 1 - Paleolithic Wolf Bone Tally Stick, sourced from KASS.

Processors are the unsung heroes of modern commerce, enabling ever freer and more efficient transactions that underpin the global economy. Let’s take a bird’s eye view of all the paths that led to NAKA.

The First Age: Currency

Around 600 BCE, the first coins appeared in Lydia, a region in modern-day Turkey. These coins standardized value, making trade more straightforward. The use of coins spread rapidly, with the Roman Empire further refining the concept by introducing minted coins with standardized weights and values. This development laid the groundwork for more sophisticated payment systems.

By the medieval period, banking institutions began to emerge, offering more secure and efficient means of managing money. The concept of the check, introduced around the 9th century by Persian merchants, revolutionized transactions. Checks allowed individuals to transfer money without physically carrying coins or bullion, reducing the risk of theft. European banks, particularly those in Italy and the Netherlands, became pioneers in developing payment systems. By the 17th century, banks like the Bank of Amsterdam offered services that included the transfer of funds through written instructions, akin to modern checks. This period also saw the rise of promissory notes and bills of exchange, further enhancing the flexibility and security of payments.

This is what made civilisation possible. By allowing farmers, miners, craftsmen, and all kinds of professionals to focus on their own jobs knowing that they had a means of safeguarding their wealth and receive compensation for their labour, cities grew, trade routes developed, communities evolved.

The Second Age: Credit

The early 20th century saw the introduction of the first payment cards, which laid the foundation for modern credit and debit systems. In the 1950s, the Diners Club card was introduced as the first charge card, allowing members to make purchases without carrying cash. This innovation was followed by the launch of the BankAmericard (now Visa) and MasterCharge (now MasterCard), which extended credit facilities to a broader consumer base and provided the framework for modern credit card networks.

Fig.2 - The original Diners Club Card, sourced from the Science & Technology blog.

The 1970s marked significant advancements in electronic payments with the establishment of the Automated Clearing House (ACH) network in the United States. ACH transfers allowed for the electronic movement of funds between banks, reducing the reliance on paper checks and streamlining the settlement process. Concurrently, wire transfers became a standard method for transferring large sums of money quickly and securely, both domestically and internationally.

ACH transfers automated the process of transferring money between bank accounts, significantly reducing processing times and errors associated with manual handling. Wire transfers, meanwhile, provided a reliable means of sending large sums of money, often internationally, in a matter of hours

As money became more flexible and payments became quicker, so too we entered our technological age. The economy was no longer strictly national. As money went global, so too did civilisation.

The Third Age: Digital Payments

The late 20th century witnessed the rise of digital payment systems. It’s unclear what the first online payment was, with much debate questioning whether it was the sale of a Sting CD by entrepreneur Dan Kohn or Pizza Hut, both in 1994. What we do know is that the proliferation of the internet in the 1990s facilitated the emergence of online payment processors, and by the end of that decade, they were well established. PayPal, founded in 1998, revolutionized the industry by allowing individuals and businesses to send and receive money electronically. This period also saw the development of online payment gateways which enabled merchants to process credit card transactions over the internet.

The growth of e-commerce further accelerated the development of digital payment processors. Companies like Stripe and Square emerged, offering innovative solutions that simplified payment processing for online merchants. These platforms provided APIs that allowed businesses to integrate payment processing into their websites easily, enhancing the user experience and boosting online sales.

The introduction of smartphones brought about a new era in payment processing. Digital wallets like Apple Pay, Google Wallet, and Samsung Pay leveraged near-field communication (NFC) technology to enable contactless payments. These mobile payment solutions offered consumers a convenient and secure way to pay using their smartphones.

Payments became instantaneous. For many of us, they became a matter of clicking a button. This allowed countless people to start their own businesses. Our lives started moving online more and more, and the human race conquered a new domain: the Internet.

The Fourth Age: Crypto

The advent of blockchain technology and cryptocurrencies has introduced a new paradigm in payment processing. Bitcoin, introduced in 2009, offered a decentralized and secure means of transferring value without the need for traditional banking intermediaries. Other cryptocurrencies like Ethereum expanded the possibilities with smart contracts, enabling programmable transactions.

From the moment the first Bitcoin payment happened (the legendary Bitcoin Pizza) in 2010 to the foundation of NAKA (initially known as Elipay), less than a decade transpired, as technological evolution ramped up.

NAKA has been instrumental in bridging the gap between traditional financial systems and cryptocurrencies. By developing the technology of the innovative GoCrypto network, NAKA has evolved to offer a holistic payment ecosystem that integrates card payments, digital wallets, and cryptocurrency transactions.

Fig.3 - The NAKA POS System

The evolution of payments didn’t welcome everyone equally. Many of us were left behind. World Bank figures are stark: almost two billion adults still have no access to a financial tool that we have known since Roman times – a bank account.

Crypto payments allow us to transcend middlemen almost completely. The same institutions that have been governing our financial lives since medieval times are still valued partners, but we don't depend on them anymore. Thanks to blockchain technology, NAKA is now bringing payments to entire communities that are unbanked and kept from experiencing the incredible societal progress that instant and secure payments ensure. Businesses that have difficulty accessing liquidity due to the nature of their assets can now do so with a tap on the screen. Companies that want to provide essential financial services to their own communities can do so in a fully customisable way.

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