Digital payment is a way of payment which is made through digital modes. In digital payments, payer and payee both use digital modes to send and receive money. It is also called electronic payment.

Digital payments have their roots in the 1870s, when Western Union debuted the electronic fund transfer (EFT) in 1871. Since then, people have been enamored with the idea of sending money to pay for goods and services without necessarily having to be physically present at the point-of-sale.  Technology has been a driving factor in the development of electronic payments. Today, making a purchase is as easy as tapping a button on your smartphone. Work with streamlining payment methods has been hard-won.

From the 1870s until the late 1960s, payments underwent a slow but gradual transformation. In the 1910s, the Federal Reserve of America began using the telegraph to transfer money. In the 1950s, Diner’s Club International established itself as the first independent credit card company, soon followed by American Express. In 1959, American Express introduced the world to the first plastic card for electronic payments.

Entering the 1970s, people became more reliant on computers as part of the buying process. In 1972, the Automated Clearing House (ACH) was developed to batch process large volumes of transactions. NACHA established operating rules for ACH payments just two years later.

The form of digital payments can be traced back to 1997, when Coca Cola launched a few vending machines in Helsinki that let customers purchase a can via text messages. Though very different from modern day digital transactions, this is believed as the origin.