Financial transaction

A financial transaction is an agreement, communication, or movement carried out between a buyer and a seller to exchange an asset for payment. It involves a change in the status of the finances of two or more businesses or individuals. The buyer and seller are separate entities or objects, often involving the exchange of items of value, such as information, goods, services, and money. It is still a transaction if the goods are exchanged at one time, and the money at another. This is known as a two-part transaction: part one is giving the money, part two is receiving the goods.

History

In ancient times non-financial transactions were commonly conducted through systems of credit, in which goods and services were exchanged for a promise of future recompense. Credit has certain disadvantages, including the requirement that traders or their intermediaries trust one another, or trust that authorities exist who can be relied on to enforce agreements. Debts must eventually be settled either with goods or by payment of money, a substance of agreed value such as gold and silver.