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But barter is better than cash

Since time immemorial, folks have bartered and haggled over goods
and services.  It’s the nature of society, which is why we have swap
shops, car boot sales and markets. 

“C’mon, c’mon, roll up, roll up, 3 for a £1 today”.
“Ere mate, I’ll give you a fiver for 20?”
“Okey-doke”.       

eBay encourages a bit of swapping, and then there’s always more focused exchange markets, such as Swapace.

But
barter is obviously more complex as a market as, rather than exchanging
cash for goods in a haggling market stall, you’re exchanging goods for
goods.  Now many of you may think that this practice is no longer
relevant, but it’s actually a growing service in corporate trade.  For
example, Stolichnaya is America’s favourite foreign vodka because
Pepsico used to get paid for their fizzy drinks in Russia through a barter exchange for Stolichnaya vodka. 

These
days, the most popular form of bartering goods and services is to build
up trade credits which are left on account until needed to buy goods
and services from others. 

In fact, this open account
operation, where credits and debits for goods sourced, manufactured and
exchanged, is of growing concern in the context of supply chains as it
potentially means that no banking services are required across this
process.  You just exchange virtual debits and credits of goods and
services traded. 

After all, some believe that Wal-Mart’s use
of trade credits is worth more than the capital they receive from banks
and shareholders.  This is why it is of concern to banks and why you
have trading associations to facilitate barter between businesses, such
as ITEX

ITEX
describe themselves as: “the leading marketplace for cashless business
transactions. Put your cash and credit cards away and buy and sell
using ITEX dollars! With ITEX dollars, money will never be the same.”

So, there is a roaring trade in bartering and swapping, estimated to be worth 15% to 20% of global trade per annum.

But one recent development that could add fuel to this debate is the bill moving through Washington State
right now which will allow consumers to swap airmiles for cash.  So,
there you go.  Fly around the world, drop carbon emissions on everyone,
and make money in the process.  Sounds like a good deal to me.

Alternatively, you could invest your bartering in sustainability by creating community currencies
to exchange time or other non-monetary forms of value. This is what
many communities around the world have already been doing, with the
most impressive concept being a thing called the Terra

Like
an airmile program, the Terra will exchange time credits and other
units of community value, globally.  Now, there’s an idea.

 

   

About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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