For many of us, the ability to transfer money across the country or world is almost second nature, something that we barely even think about.
However, the truth is that this is a very complicated process and one that was considered a small miracle whenever it was completed.
Today, we all send money online, but as recently as a few decades ago, the procedure was much more complicated. As such, here’s a brief history of how the money transfer has evolved.
It’s important to remember that the idea of a money transfer essentially came to be with the evolution of currency and money in general.
At its core, the idea of a “money transfer” is one that evolved from exchanging money for goods and services. In ancient times, bartering – trading one service or good for another – was much more commonplace.
Money eventually evolved, and once the money had an agreed-to value, the idea of a currency exchange took root.
Paper currency first evolved into a modern economy in 900 CE, but it was not a smooth transition: Money was overprinted, resulting in the first-ever battles with inflation.
This eventually evolved into a precious metal-backed currency, usually using cold or silver. As time evolved, checks began to appear.
These checks represented the first evolution in what we would consider money transfer today.
Of course, checks first arrived in the 16th century. This meant that a check had to physically be carried from one location to another, and if a check was being sent internationally, it literally had to be transported overseas. Such a system was wildly unwieldy and not at all practical.
Eventually, technology caught up with our desire to grow the world economy. The first wire transfer – the idea of electronically ordering money to move from one account to another – first began in the 19th century.
At this point, the length of the wire and limits of modern technology proved to be the only controls on the money transfer system.
As time evolved, so did technology, and wire transfers overseas became commonplace. This evolved into the idea of an Electronic Funds Transfer, also known as an ETF. It is still in effect today.
Government regulations and assisting systems eventually caught up with this desire to transfer money safely, resulting in an evolution of new systems.
The 1950s saw the advent of electronic credit cards that could be supported by banks, and the 1970s saw the creation of the Society for Worldwide Interbank Financial Telecommunication – or SWIFT – which helped to facilitate these financial exchanges.
In the 1990s, more companies began to take advantage of the growing popularity of the internet, leading to the creation of many companies that could exchange money online. Those evolved to mobile devices in the 2010s.
The history of the money transfer is a long and storied one and one that is by no means over. Many of the evolutions that we first saw in the late 19th century still exist today but have been improved upon many times over.