Empowering Barter Members

By Sergio Lub

Editor�s Note:

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 SergioLub.com and 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 recruiters.

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.

A 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 earned credits.

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 increasingly optional.