Bartering

Definition

Bartering is the act of exchanging one commodity (goods or services) for another, without the use of money.

Principles of a barter system

Bartering exchanges can happen on a very small or very large scale. Children exchanging items from their lunchboxes, for example, is a common form of barter exchange, but large corporations may also barter for goods, advertising space or other commodities. Before money became widespread, bartering was the way most people exchanged the things they had for the things they needed. Today bartering is not the most common means of exchange in any society, but it can still be a useful way of trading goods, particular when the economy is poor, there is a limited amount of money, or there is rapid inflation.

Today bartering is a useful way for people with surplus or unwanted items (such as too much furniture or a bumper apple crop) to exchange them for items that would be more useful to them. Bartering may be less convenient than using money – money is very liquid, whereas bartering relies on the coincidence that two individuals will have exactly what the other wants, at the same time and in the right quantity. However, a growing number of Internet sites are dedicated to connecting barterers and today there’s a vast range of items to trade.

Case study: Business to business bartering

BizXchange is a network of businesses who trade spare goods, services or manpower between themselves without the use of legal tender. Businesses take their under-utilised capacity (e.g. unused office space or excess goods) and advertise their items for trade on the website. Other companies will make offers for these goods or services, and trade accordingly. Unlike a traditional barter system, BizXchange users are able to use the private currency, the BizX Dollar, as a means of exchange. A key advantage of using BizXchange is that it allows businesses to hang on to their cash, which is useful for paying taxes and other charges which cannot be bartered, whilst simultaneously making use of spare capacity.

See also: TradeAway, SwapTreasures and Barter Systems