Barter by definition is the direct exchange of goods or services without the use of cash. It’s been used by people for centuries. I’ll trade what I have in exchange for what you have. I’m sure at some point we’ve all bartered in one form or another. I remember when I was a kid, I would trade my G.I. Joe figures for a box set of hockey cards. I didn’t have the money to buy the box set of hockey cards, but I could certainly try and barter for it! Fortunately enough, I found a neighborhood kid who had what I wanted and who was willing to do the barter deal with me!
Today, barter is still very much in existence. Go browse Kijiji and you’ll find a barter or swap section. There’s even a show on A&E called the Barter Kings. Barter is certainly a great way for anyone to get what they want without having to spend their cash. There are drawbacks however to direct bartering. First, I may not want what the other person is offering, second, the value of products or services exchanged may not be of equal value, and last, I may not be able to find anyone to trade with. If you are bartering on a business level, barter has since evolved into an organized and sophisticated system with the introduction of trade dollars.
Barter for businesses has its origin dated back to the 1960’s in California. A barter exchange would enroll businesses as members and help to facilitate buy and sell transactions. A barter exchange would value products and services through a virtual currency called trade dollars. For example, if you are a florist and you normally retail a dozen red roses for $25 cash, then through a barter exchange network, the same dozen red roses would sell for $25 trade dollars. The trade dollars would then get deposited into your barter bank account, enabling you to now start purchasing products or services from any one of the members that’s part of the barter exchange network. You now do not have to worry about trading direct, as the trade dollars gave business owners the flexibility to buy with whomever. You can use your trade dollars however you please!