Why Standards of Payment are developed

The Journey of Standards

From Confusion to Clarity: Why We Need Agreed Ways of Doing Things

Life Without Standards: A Bit Chaotic!

The Barter System Era

Imagine trading goods directly. A fish for bread? How much is fair? Value was subjective and decided on the spot. This led to:

• High Uncertainty: What's anything really worth?
• Inefficiency: Finding a fair trade took time.
• No Common Ground: Few, if any, agreed "rules".

The Dawn of Cheques

When cheques first appeared, people were skeptical. There were few rules for:

• Genuineness: Is this cheque even real? Format varied wildly.
• Payment Time: When (or if) would it be honored? It could take ages!
• Trust Issues: Fear of non-payment was high.

The Rise Of Standards: Bringing Order!

Over time, markets and industries realized the need for common rules. Standards emerged to solve these problems.

Reduces Uncertainty, Builds Trust

Standards provide clear guidelines (e.g., cheque formats, IBAN for e-payments). Everyone knows what to expect, reducing doubt and building confidence in systems.

Boosts Efficiency & Speed

Agreed-upon methods (like standardized cheque clearing or IBAN formats) mean smoother, faster processing with fewer manual interventions. Time is saved!

Cuts Down Errors & Fraud

Specific formats and printing specifications (like for cheques) or structured data (like IBAN) make it harder for mistakes to happen and reduce opportunities for fraud.

Encourages Adoption of New Tech

When new payment types or technologies (like electronic payments) are backed by clear standards, people feel more secure and are more willing to use them, driving progress.

In short: Standards make our world work better!

They bring order from chaos, fostering trust, efficiency, and innovation.