The Barter and Trade Industry

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Ron Whitney, IRTA President & CEO

About the Industry

The modern trade and barter industry includes four major sectors; traditional retail barter exchange companies, (also referred to as mutual peer-to-peer credit clearing systems), corporate barter companies, (who perform larger corporate barter transactions), countertrade, (usually between sovereign governments and focused on import & export of commodities) and complementary currency systems, (local/community based currencies).

The key dynamic that drives the barter industry is the excess or unused capacity that most all businesses have. That could be empty tables in a restaurant or on an airplane, or an accountant or attorney that is only billing 20 hours a week, or a manufacturer with excess inventory, or the dentist who is not completely booked, etc., etc.

Barter exchanges practice third-party trading and act as a bookkeeper/broker for members. The member sellers receive “trade dollars,” (equal in value to the U.S. dollar), when they sell their products or services. They can spend those trade dollars to buy much needed goods or services from ANY of the other members of the barter exchange – hence the third-party element – it is NOT normally one-on-one trading. The members’ barter sales are deemed taxable income by the IRS, pursuant the TEFRA legislation of 1982 that legalized the barter industry in the U.S., and members annually receive a IRS 1099B from their barter exchange verifying the gross amount of barter sales they had for the prior year. 

Due to the global Covid-19 economic downturn, many governments have recognized the benefit of increased business activity that barter systems provide. Most governments globally have followed the U.S. model and accepted barter transactions as a viable alternative form of commerce.

Industry Size – Annual Trade Volume

The total annual volume of transactions in all sectors is estimated to be in the 12-14 billion dollar range, with the caveat that the amount could vary widely, based on the amount of countertrade activity that occurs annually.

IRTA further estimates the activity per sector, as per the pie chart below. Countertrade is estimated at 50%, corporate barter at 30% and retail barter at 20%. Note that the complementary currency sector is considered to be so small as to not register on the chart.

Barter Industry By Sector – IRTA 2020

Additional Factors

The key to the growth of the barter industry in the last forty years results from the shift from one-on-one trading to third-party trading and the subsequent development of sophisticated internet-based software to maximize trading opportunities while also providing quality accounting and reporting functionality.

Virtually every business, (regardless of size), can benefit from having a barter strategy to increase their revenue, preserve their cash and capture new customers.

1 Comment

  1. Brade Flix on at 6:35 AM

    Fantastic article, really appreciating and looking forward to it