In a bartering system, involved parties use the value of the goods or services to arrive at the bargaining point.
A barter exchange network is an organization to facilitates bartering between several different parties. It can be aimed at exchanging a specific item or many different types of products. The exchange network may also be involved in the dealing of corporate resources or other high-level assets. A person needs to get registered in the barter exchange to trade the goods or the services. The exchange may hire appraisers or brokers to determine the true value of the assets to be bought or sold. The members here will be trading goods or services among themselves with no cash dealing. The barter exchange may also assign âtrading creditâ to its members, and the credits may be allowed to exchange goods in future deals and transactions. These trading credits are similar to store credit in a retail store. However, the barter exchange may impose a barter fee, usually 10-15% of the exchange value of the assets.Â
Internet bartering is fast occupying the space.
Internet bartering is fast gaining momentum due to more than one. It allows you to work from the comfortable confines of your space. Theyâre mostly popular due to low membership fees and, importantly, the availability of difficult-to-find products. Yes, the barter system isnât as easy as the cash system, but it does have some advantages that make it a viable alternative to trade.     Â
Why do people resort to barter exchanges?Â
An old proverb says money isnât everything, and this comes true here. Inflation causes the currency to lose its charm and value. The fluctuation in the economy causes stress, uncertainty and sometimes, disaster. In the situation of economic disaster and extreme poverty, people resort to barter exchanges. In many countries, the traditional currencies are not stable, so the barter exchanges are gaining immense popularity. The advantages of bartering exchange are listed below.
- Increases product/service exposure: These exchanges virtually create a new market for the trading of services or goods.
- Freedom of negotiations: The exchange members are at the liberty of adjusting the price of their services or the products to receive more lucrative offers.       Â
- New clientsâ base: The barter exchanges offer a broad base of fresh customers. The exchanges are not typically one-time deals for the members and may involve multiple exchanges.  Â
- Profitable experience: For the members of the barter exchanges, it is a profitable and enjoyable experience. Many consider it as returning to basic trade roots.
However, the association with barter exchanges has a few disadvantages as well. Some of the cons are listed below.
- Membership fees: The sizable fees are disillusioning. It may range anywhere between $200 to over $1,000, depending on the size of the barter exchange and the nature of the goods and the services it deals with.
- Difficulty in determining the real value: In exchanges, it is difficult to ascertain the true value of the assets to be sold or bought. Â
- Use of trading credit: The trading credits of the barter exchange can be utilized in the dealing in that particular exchange only.
- Transaction fees: Most exchanges levy transaction fees, around 10-15% of the exchange value. This is in addition to the membership fees. Â
The biggest difficulty in bartering is finding someone with wants or possessions that you need. However, exchanges have simplified it to a larger extent. With the advent of the internet, bartering is easier than ever. Even in healthier economies, people have resurrected the old-age practice to swap assets.
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