Financial transaction

A financial transaction is an agreement, or communication, between a buyer and seller to exchange goods, services, or assets for payment.

The most common type, purchases, occur when a good, service, or other commodity is sold to a consumer in exchange for money.

[3] The other main form of payment is credit, which gives immediate access to funds in exchange for repayment at a later date.

[6] Official systems of credit and debt were first created around 1800 BCE by the Babylonians, who established the first formal interest rate limits with the Code of Hammurabi.

[8] These often included gold or silver coins, along with non-metal objects such as cowrie shells, beaver pelts, and dried corn.

The lender agrees to give out a lump sum (the "principal") to the borrower, who pays back the loaned amount over a set period of time (called a "term").

The lender usually charges an additional percentage on top of the initial amount borrowed, called the "interest rate".

[22] Mortgages are similar to loans, but are usually for a larger amount of money and over a longer term, often for buying real estate.

Financial transaction involving money and agricultural goods at a farmers' market
Silver coin of the Maurya Empire , from the 3rd century BC
Purchases can be made through the use of physical currency, such as cash.
Transactions are associated with accounts.