If you’re struggling to keep your head above water financially, bartering may be a way for you to receive needed goods or services. In 2009, Craiglist reported that barter listings on the site had increased by 80 percent over the previous year.
It’s almost the end of the garden season, unfortunately, so trading the neighbors your abundance of zucchini for their endless supply of corn will have to wait until next summer. Ask yourself: What skills or talents do I have to barter with?
A couple who were interviewed in the Atlantic Monthly, Shawn and Deanna, cleared underbrush and small trees from a plot of land owned by a dentist. In exchange, the dentist used his skills to fix their son’s teeth.
In the story, Shawn also mentioned trading computer work, something he’s good at, with a mechanic who could fix a faulty sensor on his truck—something he’s not good at.
Your ability to barter is limited only by your imagination. When you look up the topic on Wikipedia, the illustration is an 1874 Harper’s Weekly cartoon showing a man offering chickens in exchange for his yearly newspaper subscription.
Barter Bandits
Like any marketplace transaction, you do have to watch out for scams. Obviously a level of trust exists between you and people you know, such as your yoga teacher or dentist, people at your church or your neighbors. But what about bartering over the Internet, with strangers?
That’s what Barter Exchanges are: They involve transactions between you and a third party. A barter exchange operates as a broker and bank in which each participating member has an account that is debited when purchases are made, and credited when sales are made. Using a barter exchange might reduce concern over possibly unequal exchanges, but there is a membership fee.
To investigate third-party bartering opportunities, it is a good idea to:
- Start with Trust by checking out the company on www.bbb.og and other trusted sites
- See if the company belongs to any barter trade associations
- Google the names of the principals to see if they’ve had any legal trouble
- Check with the Federal Trade Commission and your state Attorney General’s office for red flags
- Watch out for self-generated company hype including bogus “news” releases, infomercials disguised as impartial radio “talk shows” and phony testimonials.
If I barter, do I have to pay taxes?
While the BBB is not a legal entity and can’t give tax advice, a good option is to check it out with the IRS. Click on “bartering,” third topic from the top, here.
I can recommend barterquest.com. They allow users to verify themselves so you’ll know it’s safe. I used it a couple of times and it all went perfectly.
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Thanks for a great article, Holly. Barter is as old as humanity itself. I think you hit it on the nose when you said, “If you’re struggling to keep your head above water financially…”, because compared to legal tender, for sheer convenience, bartering can never compete. But whenever there are hard times, (lack of money) bartering comes flaming back to life. There are some fascinating stories on Youtube of Argentina, where bartering has sprung to life in poor communities. It could be a difference of life and death for some of those people. You can also see how it nurtures their self-esteem. One illness of our system today is how it rewards idleness instead of personal productivity. Barter has a silver lining: It encourages people to find new ways to be productive and have something to bring to the “party”. Free trade is the medicine of peace. It helps us appreciate our neighbors in spite of our differences.
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Great overview Holly! Thank you for pointing folks to irs.gov where they can learn how a modern barter exchange can benefit their business. Something else to keep in mind is that the word barter has differing definitions. Withing the context of modern barter, such as ITEX.com, it is about how a transaction occurs and is tracked. Pricing is at the sellers’ prevailing retail price. ie, the price they sell for cash is the price they receive in ITEX Dollars. The other definition of barter…to hangle / negotiate / directly swap goods & services is not applicable to a modern exchange.
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Thanks for your comments, guys! It’s good to see the level of interest in this topic.
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I’ve discovered a website called badabud.com
This is especially for creative people to trade their services and creations like art and photography. they also host downloadable files like mp3s and ebooks so you can use your digital products to trade. Its just getting going but love the idea behind it. oh and they dont charge any kind of membership and you score the trade credits when your friends sign up.
I hope it taeks off.
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The City of London Corporation recently launched a report about barter exchanges and excess capacity exchange.
The research explores existing and potential applications of multilateral reciprocal trade, including countertrade and corporate and retail barter. Reciprocal trade constitutes an estimated 20% (over US$100 billion) of global trade but contracts and negotiations tend to be lengthy and complex. The emerging multilateral reciprocal trade sector offers the potential to eliminate the inefficiencies of bilateral capacity exchange through the mechanism of common tender – an alternative means of exchange to sovereign currency which is not convertible to cash, earns no interest and can only be redeemed for goods and services within the capacity exchange.
According to the City of London press releases:
“Capacity exchange development presents untapped opportunity for London
The development of an innovative, global capacity exchange hub in London could improve productivity by reducing marginal spare capacity, stimulating innovation and providing an alternative to conventional credit, according to a new report released today commissioned by the City of London Corporation, Recipco and the Economic and Social Research Council.
Capacity Trade and Credit: Emerging Architectures for Commerce and Money highlights how businesses with spare capacity in their own goods, services or infrastructure – often the case in economic downturns – could utilise their surplus via an exchange to ‘finance’ the purchase of other goods and services that they need. Capacity exchanges have the potential to offer SMEs and larger businesses an alternative credit stream in the face of a challenging environment for conventional credit as banks rebuild bank balance sheets.
According to some reports, 20% of global trade (over US$ 100bn) takes place in non-monetary exchanges. Capacity trading across the world has traditionally taken the form of simple bartering, which involves two parties – commonly SMEs in local or national trading networks – settling a transaction through a flow of goods or services rather than sovereign currencies – or cash. This form of exchange has traditionally been seen as less efficient than monetary trade since it requires finding a suitable counterparty at one point in time and is often contractually more complex.
In contrast, the internet-based multilateral exchange discussed in the report could potentially lower transaction costs through market clearing. The report finds that London is uniquely placed to facilitate the expansion in scale needed for larger government and multinational organisations to utilise capacity trading more effectively. ”
Featured in the report was the Ormita Commerce Network, a global barter exchange franchise model with offices in 17 countries and several billion USD of barter transactions per annum.
A copy of the UK Government report can be found at the City of London website
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