Saturday, December 17, 2011
Barter is older than money and is now experiencing a Renascence 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 barter 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 were to 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 barter 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 barter administrators allow their trusted members to make barter payment to their suppliers, even when they do not yet belong to the system.
We users will enter the needed data as we process the online transaction, so there is no typing work for the barter office.
The new account does 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 it starts by earning barter credits and therefore with 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 to address this problem by allowing the inviting member to reassure the supplier somehow, for example by offering a “One Year Money Back Guarantee.”
So, instead of paying my printer cash at 30 days (and then asking for more time a month later because others are not paying me), my printer will be able to spend the trade credits right away. If my printer cannot find anywhere to spend them, then I will buy those credits with cash after a year. Even in the rare case that this happens I still would still enjoy extra free financing and my supplier gets a chance to play barter with no costs or risk.
An extra benefit of having members sponsor their suppliers is that our new members will deliver goods and services that we normally consume, thus reducing the present disproportion of luxury items and this should also help with the problem of having members “on reserve” because they cannot find where to spend their earned credits.
One last objection may come from the barter’s Road Reps that recruit new members for a fee, since for them, for barter administrators to allow members giving memberships for free, could be considered unfair competition.
The barter administrator should 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 barter administrator can gradually switch compensation for road reps to a percentage of the transaction fees, so their earnings become proportional to the volume of transactions their customer’s make. Doing this will give road reps the incentive to visit existing clients and help them become more knowledgeable and efficient in the barter economy.
As more businesses accept Barter Credits it does not take long to see a future in which we could choose to issue Barter Credits to all our vendors, to be used 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 my suppliers will in turn earn the right to invite their suppliers, eventually closing my trading loops and making the use of money increasingly optional.
Writing this in December, with the spirit of the Holidays all around, it is quite easy to visualize barter group administrators acknowledging their senior members with free memberships to gift to their suppliers, and with a little effort I can see a few innovators empowering their barter members to recruit their suppliers year-round, thus helping unleash the huge potential of barter.
Sergio Lub – Dec 17, 2011
As most artists, Sergio Lub has been using direct trade during his entire 43-year career and presently he is active in 3 online barter systems: ITEX, BizX and UC-Universal Currency. In 2009, at the Dallas Convention of IRTA – International Reciprocal Trade Association – the late IRTA President Dave Wallach, honored Sergio as a “Legend of Barter”.