How Businesses Get Paid In America

How Businesses Get Paid in America

Every business owner knows that getting paid is where the rubber hits the road. Without cash flow, it isn’t a business; it’s a hobby. But while payment in some form or another is the most necessary part of commerce, payment methods have changed dramatically over time. From the tedious and time-consuming chaos of barter systems to the seamless speed of mobile payments, transactions have come a long way.

Here, we lay out a brief history of how American business owners have been accepting payments for their work and services over the years.


Payment Type: Barter (1400s – Present)

How it worked:

Bartering allowed people to trade services for the goods they needed; instance, a basket weaver might weave baskets for a farmer in exchange for food or livestock.

Why it ended:

Although many businesses still barter to for a small extent, widespread bartering proved unsustainable because of disagreements over what constituted a fair exchange.


Payment Type: Commodity Money (Early 1700s – Mid-1700s)

How it worked:

An evolution of bartering, commodity money recognized that commodities themselves had unique value, and it enabled people to assign uniform worths to different commodities, such as gold.

Why it ended:

The need to physically transport enough of each commodity to buy desired items ultimately made commodity money impractical.


Payment Type: Coins (1792 – Present)

How it worked:

Lightweight coins made it easier to assign fixed values and pay in larger or smaller denominations (rather than forcing people to carry around, say, $100-worth of wheat).

Where it stands:

While coins remain in use, they largely have been phased out by cash and credit, both of which offer greater flexibility and lighter weights.


Payment Type: Paper Dollars (1792 – Present)

How it worked:

The first form of “representative money”, the paper dollar was the first payment type to have no intrinsic value of its own. Rather, the dollars were redeemable for a fixed amount of gold or silver at a bank or depository institution.

Why it ended:

Dollars remain in use, but they are declining in popularity as credit cards and other payment methods offer greater flexibility and convenience.


Did You Know?

In 1995:

60% of consumers used cash.

8% of consumers used credit cards.

2% of consumers used debit cards.


Payment Type: Credit Cards (1920 – Present)

How it worked:

For the first time, consumers were able to purchase what they needed from retailers immediately and pay for it later, with banks and credit cardcompanies acting as intermediaries.

Where it stands:

Today the credit card closely rivals cash as the top payment method.


Did You Know?

By 2003:

32% of consumers used cash.

31% of consumers used debit cards.

21% of consumers used credit cards.


Did You Know?

In May 2012, Mastercard revealed that 73% of Americans use less cash than they did ten years ago.


Payment Type: Mobile Payments (Mid- 2000s – Present)

How it works:

Now, consumers and merchants can transact with each other leveraging the emergence of smartphones and mobile payment applications.

Where it's headed:

Industry experts believe mobile payments will become the preferred standard for consumers and merchants alike, streamlining payment processing, record keeping and administrative functions within a single electronic system.


Did You Know?

79% of smartphone and tablet owners used their devices for shopping-related activities.

38% of smartphone users have used their cell phones to make purchases.

12% of mobile phone owners made mobile payments in 2011.


Did You Know?

214 Billion: Expected Volume of Mobile Payment Transactions by 2015.



A series of gradual, evolutionary changes delivered the wide range of payment options we enjoy today. The emergence of each new option was the result of both merchants and consumers looking to improve efficiency and ease of use, and the same factors will continue to fuel mobile payment innovations of the future. As consumers look toward improved shopping experiences and merchants look to leverage integrated loyalty rewards, coupons, and retention programs, mobile payments will continue to revolutionize the way businesses work and, more importantly, are paid as we move forward in the 21st century.