Online payments have become an essential part of our daily lives, from shopping on e-commerce websites to paying for subscriptions and bills. However, the evolution of online payments wasn’t always smooth, and it has come a long way to reach its current state.
In the early 1990s, the internet was still in its infancy, and online shopping was unheard of. At that time, the primary payment method was through checks, money orders, or cash on delivery. However, as e-commerce started gaining popularity in the mid-1990s, people began to look for more convenient payment options.
The first online payment method was introduced in 1994 by Stanford Federal Credit Union. The payment method was called SET (Secure Electronic Transactions), which used digital certificates and encryption technology to provide secure transactions. However, it was not widely adopted, and it failed to gain significant traction.
In 1998, PayPal was introduced, which revolutionised online payments. PayPal provided an easy-to-use payment platform that allowed people to transfer money securely from one account to another. The company was initially launched as Confinity, which was focused on providing encryption software for handheld devices. However, they pivoted to a payment platform when they realised the potential of online payments.
PayPal’s success led to the emergence of other payment platforms such as Google Checkout (2006), Amazon Payments (2007), and Apple Pay (2014), among others. These payment platforms provided a seamless and secure way of making payments online, which increased the trust of customers in online transactions.
The rise of mobile technology also played a significant role in the evolution of online payments. As smartphones became ubiquitous, payment platforms started offering mobile payment solutions that allowed users to make payments using their mobile devices. According to a report by Statista, the number of mobile payment users in 2020 was around 1.2 billion globally, and it is projected to reach 1.3 billion in 2021.
The adoption of online payments has also increased due to the COVID-19 pandemic, as people avoided physical contact and preferred to make payments online. According to a report by the World Bank, the number of people using digital payments globally increased by around 5% in 2020.
The future of online payments is also promising, with the introduction of new technologies such as blockchain and cryptocurrency. Blockchain technology provides a secure and transparent way of making transactions, and it has the potential to transform the payments industry. Cryptocurrency, such as Bitcoin, provides an alternative payment option that is decentralised and secure.
What lies ahead for online payments is promising, with the emergence of payment platforms such as PayPal, Google Checkout, and Apple Pay, among others, which has revolutionised the way we make payments online. The adoption of mobile technology has further increased the convenience and accessibility of online payments. The future of online payments is promising, with the introduction of new technologies such as blockchain and cryptocurrency. As we continue to adapt to a digital world, online payments will remain an essential part of our daily lives.