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The spread of Bartercard, a commercial bartering organisation
by Richard Douthwaite (February 2003)

Bartercard, the biggest commercial barter company in the world, operates very much along LETS lines except that all its members are businesses. The explanation on its website of the way it works could almost have come from any of the thousands of articles written about LETS .

Bartercard member A needs to have his car serviced. He contacts Bartercard member/mechanic B who conducts the work. The final payment is 250 Trade Dollars. Member A produces his Bartercard. Member B seeks authorisation from Bartercard via the 24 hour telephone service. Bartercard debits 250 Trade Dollars from member A's account and credits it to member B's account. Member B may then use his Trade Dollars to purchase any number of products or services from other Bartercard members.

Unlike LETS, however, Bartercard has clear and enforceable rules about debt and these, together with the fact that it believes in charging serious money for its services, has enabled it to expand from its base in Australia, where it began in Brisbane in 1991, into nine other countries in less than ten years. It had 15,000 members in Australia in 2000 and a similar number in the rest of the world. Its joining fee in Britain that year was 795 plus VAT, and it charged a 5.5% commission in sterling and a 0.5% commission in trade dollars to both parties on each trade made through its system. This meant the company had money to employ staff, who are said to be of high calibre. It assigns an account manager to every batch of 100 accountholders to help those who find they have too many trade dollars or a high level of debt and to advise those who aren't trading very much.

In the UK, new accountholders are automatically allowed an initial 5,000 line of credit but the firm's account managers can vary this or freeze trading altogether. The firm is constantly trying to recruit but on a selective basis so that gaps in the range of goods and services available for trade dollars are filled and there aren't too many accountholders in one trade category in order to avoid excessive competition between them. Ideally, new entrants should have excess capacity, operate in a fairly broad market, a good reputation, and reasonably high profit margins. All trades have to be entirely in trade dollars and have to be authorised using a free telephone number before being recorded. Each new recruit is given a Bartercard - an embossed Visa-like charge card -and a zip-zap machine in which to place other members' cards to record transactions. This equipment might soon be obsolete, however, as the company announced in April 2001 that it was supplying 1,200 members in New Zealand with 'eftphones' - electronic funds transfer phones, which eliminate all paperwork.

In each country in which it operates, Bartercard publishes a large, attractive directory of the goods and services available from its accountholders (it would be wrong to call them members). These are largely financed by accountholders' advertisements. Bartercard also organises local trade days to enable accountholders to meet. However, it but does not rely on these two avenues to increase turnover through the system - its account executives are constantly trying to set up deals between accountholders because of the commission the company earns. Indeed, looked at in this way, Bartercard's charges aren't high - most firms would be happy to pay 10% commission to an agency for the orders it generated.

The company claims the following benefits from opening an account:

  • Extra business, as the Bartercard staff are likely to introduce new clients.
  • Interest free credit, and consequently, lower borrowing costs
  • National currency is conserved as transactions do not involve the exchange of cash apart from the commission.
  • No problems with debt collection as Bartercard will seek to get an accountholder's customers to join, thereby taking the responsibility for getting payment off its shoulders provided transactions are authorised.
  • A marketing advantage over non-accountholding competitors.
  • Less exposure to market downturns.
  • In 2001, the most recent year for which figures were available in early 2003, the company had 40,000 member-firms around the world. These were serviced by 1,000 staff and a turnover of $1,400 million was achieved during the year. Bartercard's website is at www.bartercard.com.

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