What is Barter?

Published by Thomas Herold in Economics

'Barter' is explained in detail and with examples in the Economics edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.

Barter is a concept that pre-dates the invention of money. It proves to be the practice of trading goods, products, or services for other such products, services, and goods. Barter is a simpler way of transacting business, commonly without using money.

Although money systems have been in existence and well established for several thousand years, bartering for things as a practice is still alive and well nowadays. Systems of barter are used much of the time between one nation and another. Countries and companies occasionally engage in the practice as well. Barter is frequent in between businesses, and is sometimes also seen between a person and a business, or two different people. Within the U.S., bartering involves billions of dollars of services and goods that are exchanged back and forth in a single year. Per the International Reciprocal Trade Association that monitors bartering, over 400,000 businesses around the world bartered for more than $11 billion in just 2009.

Barter is sometimes referred to as counter-trade, in particular when it is used between two different countries. Bartering can be supremely convenient for countries that have an abundance of one or more resources or commodities but little cash on hand. Countries that produce huge quantities of wheat might exchange it directly with other countries for produce, oil, or textiles.

Where businesses are concerned, barter usually involves trading out services or products in consideration for advertising. Radio stations, television stations, and newspapers are common participants in barter, who may accept promotional goods for ads or on the air time. Other companies will exchange goods and services for stock in a company, or advice in consideration for services and goods.

Companies and individuals sometimes engage in barter as well. One company might give a consumer free merchandise in exchange for helpful sales leads. Individuals barter between each other for almost any item imaginable. Auction sites represent outlets for trading and bartering things. Interpersonal bartering is also carried out using online and print versions of classified ads. Today there are even barter clubs that help individuals learn more about and practice bartering.

In some countries like Spain, barter markets have arisen and spread. These swap meets forbid the use of money in any transactions. Participants simply bring along unwanted items and trade them with one or more parties for other items that they desire.

In times of national crises, bartering becomes more popular and commonplace. When currencies become victims of hyperinflation or devaluation, barter is resurrected. In these times and situations, barter can even supersede money as the principal medium of exchange.

Free Download (No Signup Required) - The 100 Most Important Financial Terms You Should Know!
This practical financial dictionary helps you understand and comprehend the 100 most important financial terms.

The term 'Barter' is included in the Economics edition of the Herold Financial Dictionary, which you can get from Amazon in Ebook or Paperback edition.