Types of Barter
The barter industry consists of four sub-categories as follows:
The first three of these categories operate under the principle of “mutual credit” and the forth involves direct trade.
Mutual credit is a type of transaction in which the currency used is created at the time of the transaction. For every member who is in credit, another member is in debt. No cash is injected into the system to lend money – instead the network of members lends money as a whole.
With a standard credit card (ie Visa, American Express, Mastercard) the company itself lends out money to cardholders who, in turn, pay businesses using the card. The businesses can then take the funds out of their account and convert it to cash which they can take “outside” of the Visa/Amex/Mastercard system.
Mutual credit involves a closed currency where the buyers and sellers can only trade within a network of those who accept the currency.