Credit serves the convenience of Brown and Jones in another way. So long as metallic money was passed at the time of exchange, every exchange necessitated the handling and testing of two commodities - the article bought and the gold given. The gold had to be carried to market, and as exchange grew in frequency, volume, and distance, to carry and count metallic money became bothersome, dangerous, and expensive. The receipt of actual metallic money was no advantage except that it might be more widely acceptable than the private credit of the buyer.

If, however, Jones accepts Brown's credit and Brown accepts Jones's credit, the burden of actual money transactions can be greatly reduced. Promises may be balanced against each other and only the net balances actually paid in metallic money. Credit operations, therefore, while making use of standard money as a unit of account and as a standard of deferred payment, obviate to a large degree the use of money as a means of payment; hence credit comes to play an even more important role than standard money as a circulating medium. As standard money facilitates exchange over the barter economy, so credit facilitates exchange over the money economy.

A credit transaction is a form of exchange in which credit is given by one of the parties; it may be a deferred payment either of goods or of money, but it is usually stated, for reasons shown, in terms of the standard money; it is a present transfer of money or economic goods or services in consideration of a promise of a future return of probably greater value. But it may also be an exchange of credit against credit, of credit against a title to goods. To illustrate: Jones may have a promissory note from Brown which arose from a deferred payment for shoes, and Smith may have a similar note against White; Jones and Smith may exchange these credits so that Smith becomes Brown's creditor and Jones becomes White's. Such operations occur every time a commercial instrument is sold for government or bank credit money and constitute the prime business of the banks and of the discount market. In fact, credit transactions constitute practically the whole business of finance as now conducted.