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The World’s Demand for Alternatives to Traditional Currency

April 4, 2018

Source: With technology ten steps ahead of the market, even more options for paying bills have become readily available for both the consumer and for the merchant. We explore the many options payment options a business may choose to accept.

Two factors have changed the way we conduct commerce and financial transactions in the world over the past fifty years. The leading factor is the faith that people now have in traditional currency. For many countries, their money supply is based on one factor—faith; the belief that the value of the piece of paper or coin is a true representative of the value of good and/or services they wish to purchase.

Prior to what is known as “fiat currency,” money supply that is backed by no hard good, commodity, or tangible asset that is widely accepted as a mark of trade, such as precious metals like gold or silver, most countries would back their value of their currency on tradable commodities which had a real market value.  In recent years, crude oil and petro chemical fuels were used to support currency, while these same currencies were used as the preferred measuring stick against oil. Such is not the case anymore, now that even tying the U.S. Dollar to fossil fuels has become volatile.

With such conditions changing, more individuals are sharing their concern, vocalizing how they have less faith in a piece of paper, which is backed by nothing.

Another trend that is leading people to explore other currency options is the development of technology. Today there are more options on how to make a financial transaction for a good or service. Beyond credit and debit cards, e-wallet and electronic paying systems such as PayPal, Apple Pay, and Android Pay are used. Crypto-currencies are also on the rise. Bitcoin and One Coin have become the top ranked electronic currencies, and merchants are racing get their business into the fold into accepting these new forms of payment.

However, one form of a financial transaction that is as old as men and trade itself is also still on the rise. Barter is growing at a faster pace due to advancements in technology, organizational set-ups, wide-spread networking, and oversight from two leading barter-industry trade organizations.

With the improvements into accountability and infrastructure, barter has never been easier. Traditionally, one business or individual would trade services or products with another party that may too have a product or service to offer in the actual exchange. This limited barter, because if one party did not need the other party’s offering, then the exchange could not take place. Today the use of a credit system has widened up the scope in the barter arena. Barter exchanges have made it easier to use barter for many business to business purchases.

Exchanges such as Badger Barter, located in Sun Prairie, Wisconsin, offers a barter exchange that includes well over 600 business ranging from auto repair to graphic design; from legal counsel and services to website creation. These types of exchanges have evolved over time to include many member benefits in which traditional barter did not offer.

As a small business, you should be exploring all payment options, in addition to traditional payments of debit, credit, cash, and check. Barter is a viable way to conduct business to business transactions and opens the door for new business relations to develop within barter exchange networks. Some retailers are now accepting Apple Pay, Android Pay, PayPal, Bitcoin, and Onecoin. However, barter is considered one of the best options since most barter exchanges offer a credit system, allowing you to use the barter on a wider selection of products and/or services.

Barter is not only a form of payment; it is also a marketing tool. There are businesses that seek out other businesses that offer barter payment options. You should notify your clients about all of the payment options you offer in multiple touch points, including but not limited to a placard at the cash register/counter; logo of the barter exchange on your website, social media, and e-mail newsletters; logo on a storefront window; print advertising; business cards; invoices; and other forms signage a client may see at your establishment.

Bloomberg Business had researched and found that in 2012, over $12 billion dollars in goods and services were traded without any currency changing hands. Research showed that not every transaction conducted was on business essentials however the barter was still utilized. Even when the most obscure product or service was offered, the bartered item eventually would find a relative home. Another part of the study revealed that small businesses mainly spent their barter in exchange for marketing and advertising; legal and professional services; facilities maintenance; office supplies; and construction/renovation services; which are many of the same expenditures a small business might use proceeds from a working capital loan for.

Samuel K. Burlum is an investigative reporter who authors articles related to economic development, innovation, green technology, business strategy, and public policy concerns. Burlum is also a career entrepreneur who currently and lends his expertise as a consultant firm to start-up companies, small businesses, and mid-size enterprises, providing advisement in several areas including strategic business planning, business development, supply chain management, and systems integration. He is also author of The Race to Protect Our Most Important Natural Resource-Water.

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