Empowering Barter Members
By Sergio Lub
Tom Greco recently sent BarterNews the following article with the
suggestion that this strategy would increase the trading base of
trade exchanges. It�s a method that�s been used successfully by
corporate barter companies.
Barter is older than money and is now experiencing a Renaissance
thanks to two factors: One is the increasing scarcity of money due
to the global recession, the other is new software that increasingly
allows people to earn and spend their trade credits as easily as
they use PayPal. Our shopping carts at
WearCopper.com, for example, accept barter as well as credit and
debit cards for the payment of online orders.
Barter will grow even larger if it could overcome the persistent
problem members have when most of their suppliers do not belong to
the same barter group as they do. Understandably, suppliers do not
want to incur the time and expense of joining another system, while
trade exchange administrators need filled applications to check
references, and the application fees to pay commissions to their
This old Catch-22 problem will disappear once exchange
administrators allow their trusted members to make barter payment to
their suppliers, even when they do not yet belong to the system.
The users could input the needed data to process the online
transaction, so there would be no typing work for the barter office.
The new account would not need extensive credit checking, since it
is known and recommended by a trusted member. It also does not need
an initial credit line, since a new account would start by earning
barter credits, therefore having a positive balance.
common objection from new potential barter members is: �What if I
cannot find where to use my barter credits?� I suggest addressing
this problem by having the present member reassure the (non-member)
supplier, maybe by offering a �One Year Money Back Guarantee.�
So, instead of paying the printer cash at 30 days (and then asking
for more time a month later because others are not paying you), the
printer will be able to spend the trade credits right away. If said
printer cannot find anywhere to spend them, then you would buy those
credits with cash after a year. Even in the rare case that this
happens you would still enjoy extra free financing and the supplier
gets a chance to play barter with no costs or risk.
An extra benefit of having members sponsor their suppliers is that
these new suppliers will deliver goods and services that we normally
consume, thus reducing the present disproportion of luxury items.
This should also help with the problem of having members �on
reserve,� because they cannot find a suitable place to spend their
One last objection may come from the exchange�s sales people that
recruit new members for a fee. For exchange administrators to allow
free memberships, could be considered unfair competition by the
sales department people. The administrator could explain that the
free memberships are �gift certificates� that members have traded
for or have earned, for example one per year of membership.
Furthermore, the administrator can gradually switch compensation for
sales people to a percentage of the transaction fees, so their
earnings become proportional to the volume of transactions their
customer�s accrue. This in turn will give the sales staff the
incentive to visit existing clients, helping them become more
knowledgeable and efficient in the barter economy.
As more businesses accept trade credits, it does not take long to
see a future in which we could choose to issue trade credits to all
our vendors, on a trial basis, during the time it takes for their
bills to become due.
In the era of networking, tapping into our established relationships
is the viral and sustainable way to go. Imagine what will happen
when new suppliers in turn earn the right to invite their suppliers,
eventually closing trading loops and making the use of money
Writing this in December, with the spirit of the Holidays all
around, it is quite easy to visualize trade exchange administrators
acknowledging their senior members with free temporary memberships
to gift to their suppliers. And with a little effort, I can see a
few innovators empowering their exchange members to recruit their
suppliers year-round, thus helping unleash the huge potential of