Today, only 8% of the world’s money exists in cash, whereas the remaining 92% exists in electronic form. Digital cash is available only in digital form, which enables an instant transaction through digital communication channels. But we rarely think what is digital transactions and what place they take in our lives. We gathered some interesting facts about money transfers.
A precursor of money transfer
The idea of money transfers originates from China. Although, the purpose was not to move money on the long distance, but rather to fill up the lack of metal money. Because of an insufficient amount of copper coins on the market, the government tried to keep coins in the region and ensure they do not move to other places. Such restriction hurt long-distance trade, thus government implemented so-called Feiqian or “flying money” to ensure smooth transactions for merchants. It was used as bills of exchange and was the prototype of real paper money. To some extent, those bills were prototypes of modern money transfers.
Letters of credit issued by Templars also can be persuaded as a precursor of modern cash transfers. Tampers issued letters of credit to pilgrims, which deposit their deeds and valuables. This letter allowed pilgrims to “withdraw” personal funds in any Tampler house on their way.
Telegraph that changed the world
The first real wire transfer took place via telegraph in 1871 in the USA. The company that performed the service was Western Union, which in those days were developing telegraph lines. The customer could come to the Western Union office in local town and “wire” money to another office, where they were paid out to the receiving customer. The service of wire transfers become so popular that for the first nine-month company managed to earn near $9 000 and till 1892 – $58 000.
We are used to the fact that finance sphere is hi-tech, but it’s hard to grasp real scale and speed of modern technologies. Only numbers can give us an idea of how unbelievable world of technologies is. Just imagine that largest global network BankNet operated by Mater Card processes 2.5 million transactions per hour and an authorization for transaction take within 130 milliseconds. For comparison: it takes human two times longer to blink one time. Exiting, isn’t it?
Another breakthrough in the financial field was the development of NFC – a technology that ensures contactless data transaction. Thanks to this technology in the store we can pay by simply attaching the phone to the card reader.
Check out an article on alternative payment systems: https://sombrainc.com/top-10-alternative-online-payment-systems
Innovations in the silver lining
Financial services take unexpected forms and it becomes possible to make bank transfer without knowing the recipient account number. All you need is an email or telephone number of the receiver. Service Interac enables users to send or request money directly to another person by email or phone number. Unfortunately, this service is only available in Canada.
Although big players on the payment market are not lagging behind, PayPal allows customers to send money to anyone with an email address or mobile number. But to receive the payment the receiver should possess or create a PayPal account. Also, in the USA, Facebook launched money transfers via its Messenger app. In order to make transfers users have to set up a debit card on their account.
Mobile operators take over banks
In the countries with undeveloped bank system, mobile providers have occupied the niche of money transfers. Phone numbers linked to the user accounts, so it’s possible to withdraw money from every local branch. For example, M-Pesa, a branchless banking service where customers can deposit and withdraw money from a network of agents that includes airtime resellers and retail outlets acting as banking agents. M-Pesa, which has about 25 million users, is popular in Africa and Asia. In addition to transferring funds between users’ locally and internationally, it has such opportunities as payment for purchases and deposit money.