Today, it is normal for anyone to pay online. All of today’s payment methods are secured using the latest digital technology, and people have grown to trust them enough to let them handle their online purchases of goods and services. This widespread availability and use of online payment methods is the result of a long evolutionary process that lasted for decades.
It all started in the mid-1990s when a bank called Stanford Federal Credit Union started to offer its users internet banking services.
Despite their availability, these services were not very popular, considering that they were far from being as user-friendly as the users would’ve liked, requiring in-depth knowledge of encryption and data transfer protocols to be operated.
Other early birds in the world of internet payments were Amazon, launched in 1994, and Pizza Hut, that started accepting online orders in the same year.
As payment systems evolved, online payments have become easier and more user-friendly. At first, banks required their clients to install a specific piece of software and use a token – a code generator – for an early form of two-factor authentication.
Later, the software became web-based, running on the banks’ servers, and the spread of mobile phones allowed authentication to be done in ways not involving third-party devices. At the same time, online payment services not offered by banks have also emerged.
Confinity developed and launched PayPal, one of the best-known online money transfer services known today, in 1999. Later, Confinity merged with Elon Musk’s X.com, an online banking service, and went public.
Soon, PayPal expanded its security features by implementing (and later acquiring) VeriSign’s secure payment solution and later launched a service called SecureCard, a solution for users wishing to buy at webshops not accepting PayPal (and generating a single-use MasterCard number for each checkout).
Seeing the success of PayPal, many other companies decided to get into the rapid online payments business.
First, it was Neteller, then Moneybookers followed, and other companies and banks have also launched their quick and simple online payment services.
Some of them are working even today, others have been absorbed by their more successful competitors (Neteller’s parent company Paysafe Group, formerly known as Optimal Payments, later engulfed services like Skrill, formerly Moneybookers, and Paysafe, to form an online payment conglomerate).
While bank accounts are still at the basis of internet-based payments, banks are not as involved in them as they were before. Users prefer to use intermediaries instead that make it more secure – and much more convenient – for them to transfer money online in a safe and easy way.