Most anywhere in the developed world, I can use a small rectangular piece of plastic,
issued to me by a bank I have never visited, to obtain local currency or purchase
goods and services directly from a merchant. The cashier and I may not even speak a
common language, and the face of my card may look quite different from those carried
by locals, but the cashier will nevertheless recognize my card as an acceptable
form of payment. My account may be measured in a different currency unit from
the merchant’s, but no haggling over foreign exchange rates needs to take place. Although
my bank may be on the opposite side of the world and closed for the night,
the cashier can insert my card into a small, relatively inexpensive terminal and in a
few seconds receive what amounts to a guarantee of payment. Even if our respective
banks participate in entirely different banking systems, that merchant will have
access to those funds, converted to local currency, generally within a day.
It is perhaps a sign of the increasing rate of technological change that we, after a
relatively short period of time, have ceased to find this surprising. Fifty years ago,
paying for goods and services outside your local area typically required the use of
pre-purchased local currency or travelers cheques, and if you ran out, your options
for obtaining more funds away from home were limited. Today, we hardly think
twice about leaving home with nothing but a payment card, and rarely reflect on
how these little bits of plastic, as well as the systems they access, have fundamentally
changed the ways in which we exchange monetary value. As with countless
other technological innovations, we have come to regard these electronic payment
networks as “normal” or even “natural.”
But there is nothing “natural” about electronic payment systems. Although those
born after the 1990s might never have known a time without them, payment cards
and the electronic networks they activate went through an explicit process of creation
and adoption, a process which actively shaped these systems into what they
are today. If one wants to understand why these systems ended up the way they did,
one first needs to understand their origins, and how decisions made in their early
years fundamentally shaped the way they evolved.