The Evolution of Payment Systems: From Cash to Digital Transactions

WhitepayPosted 28.09.2023 • 3 mins read
WhitepayNewsThe Evolution of Payment Systems: From Cash to Digital Transactions
The Evolution of Payment Systems: From Cash to Digital Transactions

One hundred years ago, no one knew about credit cards. Fifty years ago, no one had heard of e-wallets. Twenty years ago, there were no cryptocurrencies. Today, we have hundreds of payment methods to suit every taste.

Gone are the days when cash was the primary mode of transaction. With the advent of technology, digital payment systems have become increasingly popular and convenient. Lots of businesses worldwide are already accepting digital money as payment. Close to 100 companies and charities use Whitepay to do this. Blockchain technology makes payments safer, more transparent, and sometimes even less expensive.

In this article, we will explore the evolution of payment systems, from the traditional use of cash to crypto transactions. We will compare the advantages and disadvantages of each system and discuss the future of payments in an increasingly digital world. Let’s go!

The Evolution of Payment Systems

Let's compare different payment methods: from old to modern ones. Let's skip the stones and shells and start right away with the cash.

Good old cash

Cash in the form of coins has been here for a long time. The first currency, the Mesopotamian shekel, emerged nearly 5,000 years ago. Paper money was introduced in China about 1,000 years ago. Today, its share in payments is declining, but it's still popular.

Advantages of using cash:

  • Widely accepted;
  • No need for technology or infrastructure;
  • Anonymity and privacy (however, authorities would say it’s a disadvantage).

Disadvantages of using cash:

  • Risks of theft, loss and counterfeit currency;
  • Inconvenience of carrying large amounts;
  • Difficulty in tracking expenses.

Credit and debit cards

139-2.pngCredit cards emerged around the middle of the 20th century. The first credit card was launched by American Express in 1958. As for the popularity of card payments today, it’s quite significant. In 2020, card payments accounted for 47% of all transactions in the euro area (according to European Central Bank data for 2020), and its share is growing.

Advantages of using cards:

  • Convenience and ease of use;
  • Accepted globally (albeit with limitations);
  • Ability to track expenses.


  • Dependence on private companies;
  • Risk of fraud and identity theft;
  • Dependence on technology and infrastructure;
  • Transaction fees and interest charges.

Online payment systems

139-3.pngThe very first e-wallet was established in 1997. As for today, almost every e-shop accepts payments via online systems. The most popular of them is PayPal. In the second quarter of 2023, there were almost six billion PayPal transactions overall, up from 5.5 billion the year before.

Advantages of using online payments:

  • Speed and convenience;
  • Enhanced security measures;
  • Integration with e-commerce platforms.


  • Dependence on internet connectivity;
  • Potential for hacking and data breaches;
  • Limited acceptance in certain regions.

Mobile payments

Mobile payments are transactions carried out using mobile devices, utilizing apps or SMS to provide a convenient and safe transfer of funds for products and services. These systems frequently use contactless technology and digital wallets, enabling quick, cashless transactions.

Advantages of using mobile payments:

  • Seamless and contactless transactions;
  • Enhanced security features like biometrics;
  • Integration with loyalty programs and rewards.

Disadvantages of using mobile payments:

  • Limited acceptance in some establishments;
  • Compatibility issues with older devices;
  • Dependency on battery life and device functionality.

The Future of Payments

The financial system is developing quickly. What seemed progressive ten years ago is now rapidly becoming obsolete. And even more progressive payment methods are replacing them.

Contactless payments and NFC

Contactless payments are financial transactions conducted without physical contact between the payment device and the payment terminal. Apple Pay and Google Pay allow users to pay with mobile phones, so they don’t even have to bring credit cards with them. 

Advantages of contactless payments:

  • Faster and more convenient transactions;
  • Reduced risk of physical contact and transmission of germs.

Disadvantages of contactless payments:

  • Limited acceptance in certain establishments;
  • Concerns about privacy and security;
  • Dependence on NFC-enabled devices.

Crypto acquiring

139-4.pngBlockchain makes payments more secure, transparent, and sometimes cheaper. This launched the crypto-acquiring trend. Thousands of companies worldwide are already accepting cryptocurrencies for payment, including almost 100 businesses and charities using Whitepay's payment solutions.

Advantages of using cryptocurrencies for payments:

  • Decentralization and transparency;
  • Lower transaction fees;
  • Potential for financial inclusion;
  • Global application;
  • Cybersecurity.


  • Volatility and price fluctuations;
  • Limited acceptance in mainstream establishments;
  • Complexity and technical barriers.


139-5.pngAs we have seen, payment systems have come a long way from cash to crypto transactions. Each system has its own advantages and disadvantages, catering to different needs and preferences.

We see cash being used less and less (especially in developed countries). For example, in the US, only 6% of the transaction amount is in cash, 15% — in South Korea, 20% — in Switzerland, and so on. Meanwhile, cryptocurrencies are being used more and more frequently. There are over 420 million crypto users worldwide in 2023. So, the trend is pretty obvious. With the continuous advancements in technology, we can expect further innovations in payments.

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