From the Bill of Exchange to Instant Payments: A Short History of Payments

Why the history of payments is useful for owners

Hardly any area of business life is changing as quickly right now as paying: instant transfers, wallets, stablecoins, a planned digital euro. Anyone who has to decide which payment methods their business offers faces many promises and little experience. Looking back helps, because the basic questions have hardly changed for centuries.

This article therefore asks: What does the history from the bill of exchange to the instant transfer teach about which payment methods prevail and what a business should look for in new offers? To answer it, we first present the intermediary model as the thinking model, then go through the main stages, weigh two readings, and finally derive an inventory of your own payment methods.

The thinking model: every payment needs an intermediary

Baker and Cohanier (2025) describe the bill of exchange as a written instruction from one person to a second person to pay money to a third person. A merchant in Florence pays money in with a banker, the banker issues a bill, and a business partner in Bruges receives the money there from the banker's correspondent. The coins do not travel, only the promise.

From this basic form I derive a model that I call the intermediary model. Every payment that does not pass from hand to hand needs an intermediary who vouches that the promise holds: in the past the banker and his correspondent, today the bank, the card scheme, or the central bank. Every innovation in payments answers three questions anew: who is the intermediary, how quickly does the payment become final, and who is liable if something goes wrong?

The model fits a classification that Bitcoin in fifteen years describes, following Ahmad (2026): digital money can be ordered by what trust rests on, algorithms, private reserves, the state, or regulated banks. An everyday analogy makes it tangible: a parcel arrives because you trust the delivery service, not because you know the roads. Paying works the same way.

A payment is a promise on a journey. What matters is not how fast it travels but who redeems it.

The stages from the Middle Ages to today

1. 13th century: the bill of exchange

   In Northern Italy, the bill of exchange emerges as a cashless means of payment for long-distance trade. It enables credit, can be transferred, and makes it possible to earn interest through exchange rate differences despite the church's ban on usury (Baker and Cohanier 2025).

2. Late Middle Ages: transfers within the bank

   In many trading cities, merchants pay by instructing a banker to transfer an amount from their account to someone else's, often orally. De Roover (1944) describes this practice as an early form of the credit transfer.

3. 17th and 18th centuries: banknotes and central banks

   States found central banks or assign their tasks to private banks, mainly to finance public budgets and wars. The issue of banknotes becomes regulated (Pfeffer 2024).

4. 19th century: checks and giro systems

   In the United States, the check remains a local means of payment for almost the entire 19th century. Only a network of large correspondent banks makes it usable across regions from the 1890s (James and Weiman 2010). In Germany, the Reichsbank and later the savings banks build up a giro system.

5. 20th century: cards and electronic transfers

   From the 1970s, banks and retailers jointly shape card systems, following different paths in the US, Western Europe, and Japan (Maixé-Altés 2020).

6. 2008 to 2014: SEPA

   The Single Euro Payments Area SEPA replaces national procedures for credit transfers and direct debits. The SEPA procedures have been mandatory since 2014.

7. 2017 to 2025: instant transfers

   The European scheme for instant credit transfers has existed since 2017. Since October 9, 2025, banks in the euro area must be able to send them, at the price of a normal transfer.

It is striking how long most innovations took before they shaped everyday life. The check was in circulation for decades before it worked across regions. The instant transfer existed for eight years before it became mandatory. Each time, the technology was there earlier than the network of intermediaries that had to carry it.

Why the bill of exchange needed reliable bookkeeping

Baker and Cohanier (2025) show a connection that is instructive for today's payment methods. The bill of exchange could only spread because double-entry bookkeeping emerged in 13th-century Northern Italy. Each bill was recorded as a credit with the recipient and a debit with the payer, and every transfer to a further holder was noted. This made it possible to manage cash flows across cities without moving coins.

The authors name four reasons for the spread of the bill of exchange: the need for cashless settlement, lending by merchant bankers, transferability through agents, and avoiding the ban on usury. In all four cases, bookkeeping was the precondition. Only bookkeeping created the trust that made payments between strangers over long distances possible.

The parallel to today is obvious. At its core, a blockchain is a shared register, like a shared account book. Whether it prevails for payments depends, as with the bill of exchange, not on the technology alone but on whether intermediaries and rules emerge that payers and payees trust. What became of Bitcoin's original idea is described in Bitcoin in fifteen years.

Where Germany stands today

The Bundesbank's payment statistics for 2025 show how strongly older forms live on. By number of transactions, the card leads; by value, the credit transfer. At around 66 trillion euros, it accounted for about 90 percent of the value of all payments. Instant transfers doubled to around 680 million transactions, and their share of electronically initiated transfers rose from 4.9 to 9.4 percent.

How payment methods are distributed in business between companies and why the instant transfer has the best prospects there is described in Paying in B2B using Rogers's diffusion model. Council and Parliament have been negotiating the digital euro since July 2026, and the ECB wants to be ready from 2029, as The digital euro shows.

For payments abroad, the medieval merchant's problem has not yet been solved. Bindseil and Pantelopoulos (2026) describe the search for cross-border payments that are at once immediate, cheap, universal, and settled in a secure settlement medium as a search for a holy grail as old as long-distance trade. They examine six paths, from modernized correspondent banking through Bitcoin and global stablecoins to interlinked instant payment systems and digital central bank currencies, and consider several of them suitable for improving the situation significantly.

Two readings: revolutions or slow continuation?

Both readings have evidence on their side. The first is supported by the fact that every innovation increased the speed and reach of payments. The second is supported by the example of the instant transfer: it prevails because it changes almost nothing except speed. Anyone who transfers money keeps transferring, only faster.

I consider the second reading the better basis for decisions in a business. History shows that payment methods rarely prevail overnight and that intermediaries, rules, and bookkeeping are almost always slower than the technology. This does not imply reluctance toward the new, but a calm view of promises that announce a rapid upheaval.

The payment methods inventory for your business

From the intermediary model I derive an inventory that I call the payment methods inventory. It takes an hour and shows where your business depends on which intermediary and where switching pays off.

1. List all routes through which you receive and make payments, with their share of revenue.
2. For each route, enter the intermediary, the time until final credit, and liability for errors.
3. Check where faster crediting brings you liquidity, for example by asking large customers to pay by instant transfer.
4. Check where you depend on a single intermediary, and keep an alternative ready for important routes.

How to shorten the time between invoice and payment is described in Late payment and receivables management.

Transferability and limits

The history of payments is a history of trust in intermediaries. From the banker with his correspondent through central banks to card schemes, each era produced its own intermediaries, and each new form had to show that it keeps its promise. Why trust in money ultimately depends on institutions is described in Central banks and trust in money.

The limits of this short history are clear. It selects stages and simplifies; the development differed from country to country. The historical studies cited mainly concern Italy and the US; for Germany, the account of the giro system relies on generally known milestones, not on original source research.

Conclusion: the technology changes, the question of the intermediary remains

To the guiding question: the history from the bill of exchange to the instant transfer shows that payment methods prevail when a reliable intermediary stands behind them and they fit existing routines and bookkeeping. The bill of exchange needed double-entry bookkeeping, the check a network of correspondent banks, the instant transfer a legal obligation. The intermediary model sums it up: every innovation answers anew who vouches, how quickly the payment becomes final, and who is liable.

For your business this means: judge new payment methods by the intermediary, not by the technology. And use what is already there. The instant transfer is the biggest change in payments in years, and it costs nothing extra.