What is a payment system? 3. When people or businesses enter into economic transactions, i.e. buy and sell goods and services, the value thereof needs to be settled. Before the concept of money came in, the settlement was through exchange of goods and / or services and it was called the barter system.
With the concept of money, the sale and purchase of goods and services are being effected or settled by payment of money. 4. The ‘money’ was in early days the precious metals like gold and silver. Later, the governments issued coins made of these precious metals as money; still later, the paper money, the currency, became the norm as the money.