Question

2. Discuss and explain the evolution of the payments system (money) in as much detail as possible.

Answer 1

Evolution of payment system:

1) Barter system: These system is followed some few centuries back until money is discovered. In this system there will be exchange of goods and services for other goods and services.

Ex: If some person has corn with him and other person has rice with him. They both exchange rice for corn and corn for rice with mutual understanding.

2) Gold: After that people used to trade for gold where for every good and service consumed they used to pay them in the form of gold.

3) Coins: After gold people used pay coins as means of exchange for goods and services.

4) Money: After that people used to exchange paper money for goods and services they consume. Paper money is still now in use.

5) Payment system: After the evolution of banking industry and improvements in technology now we are using electronic payment system where directly money is paid from our bank account in which we save money.

Example : Debit card, credit card, NEFT , RTGS etc.