The no-cash society
No tax, no interest, more sales: there is a lot to be said for barter. Paul Gosling reports on an old story
Wednesday 05 February 1997
Now, though, barter has been reinvented. Its wheels have been oiled by exchange notes and credit slips that allow members to trade in a vast array of goods.
But if barter can be transacted effectively only by using a system of exchange credits, what is the point? Surely barter is then simply money under a different name? Not so, says Mike Timoney, joint managing director of Bartercard UK, the newly launched barter brokerage service.
"The basis of barter assumes that businesses would love to buy everything through the supply of more of their own goods," says Mr Timoney. "Say you are a hotel owner. The hotel would love to get printing done by barter, but you have difficulty in finding a printer who wants to stay in your hotel.
"We are a third party record keeper, which allows the hotel to go to the printer and have that printing done using their Bartercard, just as you would use a Visa or a Mastercard. The voucher comes to us for processing, and the printers are free to spend that credit with any of our other clients."
Purchases, in other words, are represented by extra sales, rather than as a cost against sales. What is more, the new trade is partially financed by interest-free credit. Clients are not charged for goods purchased, even if they have not yet supplied other products in exchange.
Evidence supports Mr Timoney's view that barter has a future as well as a past. In the US, half of the top 500 corporations trade regularly through barter, creating a $6bn (pounds 3.8bn) a year exchange trade, and it is growing fast. In Australia, Bartercard alone has A$25m (pounds 13m) trade a month.
There are differences between the US and the UK. In the US, "corporate barter" is popular with most big corporations, which trade, for example, old stock in exchange for unsaleable, non-peak television advertising, either directly, or via a broker. These are clear "win, win" transactions.
Bartercard UK is aimed at the "retail barter" market, brokering between small businesses, exchanging products at market value, with transactions taxed accordingly.
"We are unique in having account managers," explains Mr Timoney. "We have a sales team to promote the concept to the client, and we give the accounts managers the job of education, stimulating sales and providing a shoulder to lean on."
So far, 220 clients have been signed up by Bartercard UK and a further 50 organisations are joining each month. The company has 16,000 clients worldwide, mostly in Australia, New Zealand and Sri Lanka, and is about to launch in Malaysia as a base to operate across the Pacific Rim region.
It may be difficult to overcome existing prejudices in Britain, not least among companies that have been involved with earlier barter scheme promoters, some of which went bust. Even the much-publicised local exchange trading schemes, Lets, that facilitate barter between individuals, have not taken off to the extent predicted.
And barter, using a broker, has a price: Bartercard charges pounds 595 to join, a pounds 20 monthly membership fee (half in cash, half in barter), and a charge of 5 per cent on the sterling value of each transaction in cash, plus another 1 per cent in barter.
Yet many businesses that have tried barter are positive about it. Rosemary Streamer runs an accountancy service in Reading (where the local council has also joined). Small businesses like hers have the most to gain, she believes, because it helps them to expand without having to borrow.
"There is no way I could have bought all my new equipment, computers and plain paper fax, and update all my computers, in a cash-only world," says Ms Streamer. "It has also allowed me to access a lot more clients than I could in a cash world. It is a brilliant concept. Bartering is like joining an exclusive club. Your name becomes known to other parties."
Without raising any extra capital, Ms Streamer obtained pounds 10,000-worth of new computer equipment, allowing her to use her savings on software to improve efficiency. "You maximise potential and profitability because you already have the staff," adds Ms Streamer. "New customers are coming in, but the costs are covered so you generate extra sales for nothing. I don't know why someone didn't do this before."
The wheel, it seems, is turning full circle
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
Actress sees off speculation about her appearance in an amazing way
Review: Despite an uphill climb to see Jake Bugg in action, his performance is notably flat
Mark Dampier: Woodford’s young companies could be the stars of the future
The best - and worst - investments in 2013
Money round-up video: Low-rate mortgages; comparison sites; ethical finances
Nationwide forced to apologise again over online banking problems
Bargain Hunter: Cut-price radiator reflectors can stop all that heat going to waste
- 1 Renee Zellweger on plastic surgery reports: 'I'm living a fulfilling life and I'm thrilled that perhaps it shows'
- 2 Salisbury ranked seventh-best city in the world to visit in Lonely Planet’s Best in Travel 2015
- 3 Disney announces new female-led film Moana
- 4 Banksy not arrested: Internet duped by fake report claiming artist's identity revealed
- 5 Russell Brand threatened with arrest after filming outside Fox News headquarters
Cameron is warned 'no possibility' of UK reducing immigration and that bid to bring in quota on migrant workers would be illegal
Residents should throw a street party and mix with immigrant neighbours, councils told
Russell Brand threatened with arrest after filming outside Fox News headquarters
Of course, teenage girls need role models – but not like beauty vlogger Zoella
London bus driver 'kicks gay couple off for kissing'
Jose Manuel Barroso warns David Cameron against making 'historic mistake' over immigration reforms
iJobs Money & Business
£24000 - £28000 per annum + bonus & benefits: Ashdown Group: IT Business Syste...
£18000 - £23000 per annum + Commission: SThree: The SThree group is a world le...
£18000 - £23000 per annum + Comission: SThree: The SThree group is a world lea...
£20000 - £25000 per annum + OTE £Competitive: SThree: SThree Group and have be...
Day In a Page
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens
A seven-bedroom Grade II-listed property with a separate self-contained apartment
A five-bedroom Victorian house with three reception rooms and galleried landing, £695,000
A six-bedroom farmhouse with five acres of land in a former cloth-making village