The Evolution of Payment Systems: From Barter to AI-Driven Digital Transactions

 In the future, the mode of transactions for buying and selling goods or accessing services will be completely different from the current paper money system or partial digital payments, evolving towards a fully digital transaction system.

Evolution of Payment System

Historical Payment Systems

In ancient times, goods were exchanged through the barter system, where people traded items for other items to complete transactions. Later, during the era of kingdoms, metal coins were minted using metals with emblems to guarantee their intrinsic value, facilitating trade. However, the drawback with metal money was its inconvenience in carrying large sums over long distances.

The Emergence of Paper Currency

Chinese rulers introduced the concept of utilizing paper money for long-distance trading, which soon spread to traders and merchants in other parts of the world. This innovation aimed to create a standard exchange between different currencies by linking the value of paper currency with the value of gold.

The Rise of Digital Currency

Since then, currency has been primarily exchanged in the form of paper money issued by central banks, relying on trust. The minting of coins and paper money has gradually declined with the advent of digital currency. Currently, more than 90% of transactions are conducted through credit cards and banking technology.

The Impact of Unified Payment Interface (UPI)

The digital payment landscape has witnessed exponential growth due to the increasing use of smartphones, the feasibility of peer-to-peer payments through UPI, digital infrastructure, and heightened awareness of credit card usage.

The Unified Payment Interface, commonly known as UPI, has been a flag bearer of the financial revolution, connecting millions of users for seamless transactions, thanks to its inclusivity and a simplified, structured digital platform.

Digital Rupee and Blockchain Technology

The Digital Rupee (e₹-R) is the legal digital currency launched by the RBI to perform transactions and hold value similar to paper currency. To enhance daily transactions, SBI has introduced UPI interoperability in the Digital Rupee, enabling users to scan merchant QR codes for transactions.

With the advent of blockchain technology, decentralized cryptocurrencies like Bitcoin, Ethereum, and Tether are creating a buzz in the digital payment space. Recently, Cristiano Ronaldo, in association with Binance, the world's largest cryptocurrency exchange, launched a collection of NFTs (Non-Fungible Tokens) titled "ForeverCR7: The GOAT" with distinct designs. Users holding the SSR NFTs have the opportunity to participate in a training session with Cristiano Ronaldo.

The Future of Digital Payments with AI

Looking ahead, Artificial Intelligence (AI) will revolutionize digital payments, handling large-scale financial transactions while minimizing financial fraud and errors. This will enable quicker and contactless transactions, with advancements in voice assistants like Alexa, Google Assistant, and Siri. AI will harness big data to identify trends and patterns from past financial behavior. In case of unusual activity in a bank account, AI will promptly alert account holders and banks, allowing them to reconfirm transactions or block accounts to combat financial frauds.