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Why Bartercard is a waste of time and money [warning]

Why Bartercard is a waste of time and money

Because Bartercard increases turnover, many business people take a long time to realise the tangible and intangible costs that go along with marketing in the barter economy.

This morning I had a phone call from a polite and enthusiastic sales rep from Bartercard. Having been a member of Bartercard some years ago, I know a reasonable amount about how it works. However, every time a sales rep from Bartercard calls me, I’m always amazed by how little they understand the actual cost to the members. I thought it was time to put out a few warnings about the downside of Bartercard. Note: There have been a lot of comments added to this blog. Some are from customers both happy and unhappy. There are also comments from people who have worked inside Bartercard itself. Please feel free to add your own Bartercard Reviews!

For those of you who don’t know anything about Bartercard, it’s a system that a business can join to “trade” with other members of Bartercard. A business will normally be given a line of credit worth T$10k – that’s 10,000 Trade dollars. The business then goes and spends this line of credit, incurring fees. These fees are as follows;

  • 5.5% transaction fee on any sale or purchase in cash (real money).
  • 1% transaction fee on any sale or purchase in Trade dollars.

The business then accepts purchases in Trade dollars from other Bartercard members for their goods or services and so the cycle continues.

Something that is important to note is that nowhere on the Bartercard website are these fees listed as part of the information available to a prospective member. The only reference I found to them was a couple of obscure articles from 2009. You can verify this yourself by doing a search like this on Google: “site:nz.bartercard.com 5.5%” – or just click that link.

At this point, you might be thinking that the fees don’t sound too bad, if you can get some extra business that you wouldn’t otherwise get? However, the catch isn’t just in the fees. The real cost of Bartercard is in other factors both tangible and intangible. Let’s cover a few of the benefits that Bartercard claim and see how they stack up. Remember that these are my personal opinions and not everyone will have the same experience with using Bartercard that I had. If you just want to get to the nitty-gritty, head down to “What’s the real cost of Bartercard?”.

Barter increases sales
Bartercard has over 7000 members in NZ, so this is certainly true. When I was using Bartercard, we took over $30k in extra business in a year.

Barter improves cashflow
This claim, I don’t agree with at all. In fact, I don’t see how making sales with greater fees and increased costs for something that isn’t real money, can improve cashflow. In my experience, it was a significant drain on cashflow. I see how Bartercard try to make this claim but it just doesn’t stack up.

“Cash savings are the primary benefit of barter. Barter allows you, as a business owner, to pay for what you need with your own goods or services, allowing you to preserve working capital for other expenses.” 

Not in my experience. Most people I’ve spoken to who use Bartercard struggle to find ways to spend their trade dollars as a business expense.

“When you use barter, instead of cash, to purchase needed goods and services, you reduce your cash costs by paying for them with revenue generated by incremental barter sales.”

“Bartering helps reduce cash outlays for overhead costs. Many of the services offered through barter — such as accounting, cleaning, gifts, restaurant dining and travel — relate to overhead costs. Obtaining these overhead services through barter rather than writing out a cheque saves you cash.”

This doesn’t really make any sense. A cost is a cost, whether or not it’s cash is irrelevant. In fact, with fees, it’s actually costing you more.

“Making purchases with your Trade Dollars means the payment is made with new sales – sales made by your exchange affiliation.”

Okaaay… but in reality, no one joins Bartercard because they’re already working at capacity. Bartercard is quite simply not as good as cash, so businesses who join Bartercard, tend to do it because they need more income. Trade dollars are not as liquid as cash, increase costs and come with other problems.

Barter moves excess inventory and fills idle inventory time

“Bartering also allows you to improve inventory management by converting excess products into valuable goods and services. If you barter, you avoid having to liquidate excess inventory through drastic discounting.”

This I do agree with, because if you look at it from a different angle, it highlights one of the main problems with purchasing products through Bartercard – they are often crap! Excess inventory exists because it didn’t get sold. The reason it didn’t get sold is possibly because no one wanted to buy it because it was over-priced, inferior or just that no one wanted it. This isn’t the case all the time but as anyone who is a member of a “points” program (I use Airpoints), the products often turn out to be not quite as good as you though they would be.

Barter can enhance productivity

“Barter helps companies put inventory, equipment and employees to good use, creating new revenue that would not have been available otherwise. That new revenue can be used to finance the purchase of new equipment, raw materials or services to support the business. Essentially, a company’s less productive assets are exchanged for more valuable goods or services through the help of a barter exchange.”

So what you’re saying is that we should trade our unproductive assets for someone else’s unproductive assets… hmmm. It doesn’t shout “quality” does it? See the next claim…

Barter can reduce non-performing assets

“Businesses with obsolete inventory frequently find that bartering the assets yields a much better value than liquidating it for pennies on the dollar. Instead, the company can sell the inventory to a barter member for trade credits close to the carrying cost or book value, and then apply those credits to other business expenses, such as marketing, entertainment, travel or raw materials. Exchanging an unwanted asset for something else of value helps recover a significant amount of incremental revenue that might otherwise have been lost.”

Quality is one of the biggest issues I had with Bartercard. Because the product or service being offered is being paid for with a Trade dollar and not real money, the provider tends to offer a lower quality product or service than you’d normally get if you were paying with cash. Prices also tend to be higher to compensate for the perceived lower value of the Trade dollars and everyone walks away wondering why they bothered in the first place.

Barter can reduce seasonality

“During periods when business is typically slower due to a company’s goods or service mix, companies can still strengthen their overall financial position by accepting trade credits through barter.”

Sounds great but again, the costs and difficulties are glossed over.

Barter facilitates new cash sales

“The key to sales success is referrals – word-of-mouth marketing. If you perform a good job for a client you serviced through your barter exchange, they will undoubtedly refer their cash-paying friends, clients, family and associates to you.”

The trouble is that it doesn’t work this way. What happens is that word gets around that there is a new Bartercard member offering a valuable service or product and they get swamped with other Bartercard members trying to dump their Trade dollars on them before they figure out what the “benefits” really are. Once I stopped using Bartercard, all the members that had been using my services evaporated into thin air to find the next sucker web designer!

Barter facilitates increased profits

“Sellers within a barter network make incremental barter sales (over and above their cash business) and increased sales mean increased profits. Additionally, the real cost of the goods or service you purchase on trade is actually the wholesale cost of your Trade Dollars earned (see benefit: Barter creates wholesale buying power).”

Bartercard have a habit of making what are some of the worst aspects of Trade dollars sound like a benefit. Yes, members may well have increased profits. What do increased profits mean? Tax. As Trade dollars are taxable just like any other income, the IRD will want their cut. If you haven’t managed to spend all your Trade dollars on deductible expenses (I was never able to), where is the cash gong to come from to pay for the GST and income tax? You guessed it, your normal cashflow. Remember how Bartercard was going to improve your cashflow? Yeah right.

Barter expands distribution channels

“Barter exchange members can cost-effectively expand their business market reach by marketing to the exchange network’s membership base. The larger the membership base, the better, as this provides a larger market and a far higher selection of trading options. Bartercard has a nation-wide and global membership of over 7000 New Zealand businesses, and over 36,000 around the world. This provides strong marketing and trading options through its national and global directory service, plus the national opportunities the eMARKETplace offers.”

Yes, it expands your opportunities to get more Trade dollars you can’t spend. Awesome.

Barter creates wholesale buying power

“With barter exchanges, the real cost of the goods you purchase on trade is actually the wholesale cost of your Trade Dollars earned. Making sales with built-in profits makes the cost of your purchases more economical on trade. When you join a barter exchange, you open the door to a new, cash-free way of handling everyday business and personal expenses.”

Does this make sense to anyone? If anyone can explain it, please register and post a comment because it just sounds like meaningless waffle to me.

Barter builds customer loyalty

“When one business is connected to another through barter exchange, the two businesses are connected by more than a simple transaction, rather a network. Businesses that routinely trade for goods and services will bypass competitors to deal with each other.”

Because no one else wants their Trade dollars! And if these two theoretical businesses had any brains, they would stop using Bartercard, avoid the fees and just use cash.

Barter gives you advantages over your competition

“Increased customer base, expanded geographic markets, additional sales, improved cashflow and increased profit, all facilitate increased advantage over your competition. Bartering through a trade exchange can assist a small business to portray the image of being a big business without the cash-costs incurred by much larger businesses. For example, barter enables businesses to execute additional marketing to gain more sales without spending cash.”

Bartercard are really big on making “spending cash” sound like something that dodgy people do in dark alleys. It’s a contradiction that is repeated over and over again. They are at pains to convince us that Trade dollars are just like cash but only better, funner and used by only those who are smart enough to step away from the fools who prefer cash!

What’s the real cost of Bartercard?

As I mentioned earlier, when I used Bartercard, we took around T$30k+GST (30,000 Trade dollars) in a year. What I’m showing here is the worst case scenario, not exactly what happened with us. For the sake of the example, I’m also assuming that we also spent all the T$30k in the same year.

In this example, all the Trade dollars are spent on personal, non-deductible expenses. In an ideal world, you’d spend all your Trade dollars on business expenses but we found this to be impossible.

The Bartercard cashflow drain

  • Bartercard Sales Fees (5.5%) – $1650.00
  • Company Tax (28%) – $8400.00 (it was actually 33% when I was taking Bartercard)
  • GST – $3913.04
  • Monthly Fees – $420.00

Total cash required to take T$30k is $14,383.04 – nearly half of what was taken. Remember that this cash has to come out of your normal operating cashflow. Using Bartercard actually means you need to earn even more cash in order to subsidse the Trade dollars that you take in. If Bartercard object to this calculation, I invite them to correct me on these figures.

  • The monthly fee, I set at $35. I couldn’t find the actual fee for NZ anywhere, so used the same fee as Bartercard Australia charge.
  • There are also other fees for directory listings and advertising but I couldn’t find any details on those either.
  • There is also the 1% T$ fee on all sales and purchases.

Yes, this is a worst-case example but it still highlights the massive cash drain that Trade dollars can have on your business. Even if you were able to spend ALL your Trade dollars on business expenses (and you’re unlikely to) so that you paid no company tax or GST on the income, there is still the question of the huge 13% total fees for transactions, plus other membership fees.

How these fees impact on Bartercard members in practice

Basic economics dictates that if costs are added to a transaction, prices will rise to accommodate that cost. I’m not just talking about the fees or tax costs either, there are other less tangible costs that find their way into the Bartercard economy.

Opportunity Cost
Taking Trade dollars means that you can only spend them on the goods and services available in Bartercard membership. Even with so many members, this significantly limits your options.

Inconvenience Cost
After taking the time to track down a business that will sell you what you want, there is no guarantee that they will take your Trade dollars. This happened to me a lot and when they were willing to take them, they often wanted to take part in cash. This was against Bartercard rules but it happened all the time.

Wasted Purchases Cost
As we became frustrated with our inability to spend this massive haul of Trade dollars that we were sitting on for business expenses, we started to buy things we didn’t really need, just to get rid of them. This took us into a false economy, where any benefits that did exist by using Bartercard were gone as we felt forced to waste the Trade dollars we did have.

Personal Purchases Cost
Because it is often so difficult to spend on business expenses, members tend to buy a lot of personal things instead. This immediate creates additional cash costs for GST and Income Tax.

Perceived Value Cost
This is probably the worst of all and is the real source of a lot of the problems with Bartercard. Due to all the above costs, inconveniences and difficulties associated with Bartercard, members (rightly) don’t consider them to be as valuable as real money. They adjust for this by raising prices or reducing value on Bartercard purchases. This is against Bartercard rules but it happens all the time. Wikipedia states that “Most independent forums (like Whirlpool.net.au) consider the value of 1 Bartercard dollar to be about 0.33c AUD”. That means your Trade dollars are only worth a third of the value of real money.

Why use Bartercard?

Given that there are so many downsides to using Bartercard, I’m amazed that so many businesses still seem to use it. The inherent and intangible costs are a huge barrier that only seem to be recognised by those who experienced them for themselves.

If you’re considering using Bartercard, don’t. Put those costs into marketing your business more effectively and get real cash income without all the added fees!

30 Responses to Why Bartercard is a waste of time and money [warning]

  1. asampwhaler says:

    Ok so reading through there seems to be a lot of negative about Bartercard. Everyone wants to talk about the negatives, we thrive on it, lets see how it has impacted real business…

    We trade approximately 2mill annually on Bartercard. Its easy to come by but you have to work to spend it. If your not prepared to put in the work to spend then it will not work.

    Barter decreases your cash expenditure. Yes you have to break loyalty with your existing supplier/client or as we have done suggest to your existing client/supplier they join Bartercard. Who’s business is more important, your’s or theirs. In times of recession you need to leverage your business as much as possible.

    We were able to turn $150k of dead stock into $300k of Barter in a matter of a month. This 300k went back into our business and was spent on advertising, brochures, signage, business travel, staff incentives, client incentives all areas we were previously spending CASH on… Funnily enough our international partners were thrilled to see such an ingenious idea and still do to this day.

    The second big thing Barter assisted with was manufacturing. Sales were down in the cash economy, but we lifted them up in Barter. We were able to keep some 20 extra staff employed during our worst times because the line kept rolling.

    We are one of only a few of our type of products available through Barter, do you think we are approached first over our even cheaper competitors, you bet ya! Members of Bartercard will always try and find what they are after on trade before spending cash, that’s the whole idea so yes, you leverage your business here also.

    In effect, is Bartercard not just another payment method that could be accepted by each and every business worldwide. Some businesses just don’t get it, and that’s fine, there’s more out there for companies that do grasp the concept. Yes there are fees involved. Call the fees advertising, its a direct cost, you know that the cost of advertising on every single product you sell is the % of cash fees… How many businesses wish they could know and better still predict their exact cost of advertising on a product each and every time you sell…

    If you can’t grasp the simple concept of Bartercard then stay put in the cash economy and watch sales and opportunities skip by. Bartercard told me when I first started that it will work for every business, just not every business person…Couldn’t be a truer word said as some of the previous comments prove.

  2. Dave Smyth says:

    Hi Aaron,

    Thanks for your detailed comments. Considered debate is always good. Yes, my post is predominantly negative but I can back it up, so let’s go!

    There’s a few things you mentioned that support the points I’ve made.

    1. You were able to move $150k of stock that you were unable to sell for cash.

    The obvious reason that you could move this stock for Barter Trade dollars and not for cash is that not enough people wanted to pay cash for it. As there are far more people with cash than there are people holding Trade dollars, we can say that the buyers using Trade dollars either consider them to be worth far less than cash and/or were desperate to get rid of them.

    2. Barter decreases your cash expenditure.

    Let’s be generous and assume the Trade dollars are all used for business expenses. But… so what? What does that really mean? It’s an empty statement Bartercard make as if it’s something good, when in fact it’s bad. I would rather pay $100 cash for something than T$100 (trade dollars), PLUS $11 cash fees to Bartercard, PLUS T$2 trade fees. How is paying (at least) 13% more than if you used cash a good thing?

    3. The second big thing Barter assisted with was manufacturing.

    It sounds like you’re referring to the unwanted stock that I covered in point #1. I admit that this is one area where businesses selling a physical product can benefit from Bartercard. If no one wants it and you can’t get cash for it, take trade instead.

    4. We are one of only a few of our type of products available through Barter, do you think we are approached first over our even cheaper competitors, you bet ya!

    Of course you are – dumping trade dollars is hard! People happily pay more for something when the currency they’re using is considered to be worth less.

    Finally… it’s easy to prove that Trade dollars are seen as being worth far less than real money. I believe you’re a Sales Manager for the company you work for, so your focus is on gross turnover rather than bean-counting. The minimum cost of taking T$2m is $110k cash and T$20k trade. Anything that isn’t able to be spent as a business expense also drains extra cash for GST and more cash for tax. The maximum cash cost of Bartercard is potentially as much in cash as you take in Trade dollars, creating a massive drain on cashflow. This doesn’t even take into account intangible costs.

  3. botkel says:

    I agree with a lot of the points asampwhaler has made. I don’t think you’ll find any person who knows my organisation that would claim it is so hopelessly managed so as to not understand the full implications of trading in Bartercard. Yet for 8 years we have been members of Bartercard & will happily continue into the future. Yes it took us a little while to learn how to use it effectively but as we have overcome this hurdle we have never looked back.

    “I’m amazed that so many businesses still seem to use it.”

    I think it would be a safe assumption that on the balance of probability there are likely to be a good number of savvy business people in the 7,000 members Bartercard have. This being the case I’d suggest that your analysis of Bartercard doesn’t quite pass the sniff test of objectivity. Either you are far more intelligent than the 7,000 members who believe there is merit to the system, or your view is possibly a little biased by your historical inability to make the system work for your business.

    Your analysis under “The Bartercard cashflow drain” I think highlights this point. Yes, it’s pretty easy to draw up a worst case scenario for the cost side of Bartercard, then ignore any potential benefits (or write them off as trash) and then claim to have proved it is a waste of time. On the flip side if you DO manage to spend your trade dollars on tax deducatable expenses, suddenly the vast majority of your ‘exposed’ costs are no longer applicable & provided you aren’t throwing away your trade dollars on worthless services / products you don’t have to gain a lot of additional benefit to be starting to save cash costs.

    I can appreciate that apparently you didn’t manage to find decent suppliers for areas you were currently spending cash – but I’d suggest that’s more a reflection of your ability to do so than decent suppliers simply not existing.

    “The obvious reason that you could move this stock for Barter Trade dollars and not for cash is that not enough people wanted to pay cash for it”

    That’s a pretty simplistic view of the business world and one I would suggest again exists primarily to support the points you have set out to make.

    Our business operates on high fixed costs which are required to provide a certain level of productive capacity. Beyond that we have low variable costs. Like any business the requirements on our production department ebb an flow a little – some months higher and other months a little lower. We attempt to balance it as much as possible but regardless of any attempts there will always be times in such a scenario where there is spare capacity.

    We don’t get a refund on this capacity if it goes unused. The vast majority of the costs are already paid for & topping it up to full will have minimal impact on our cost structure. This is where Bartercard is great.

    We find it pretty easy to come across Bartercard deals. Yes of course Bartercard trade $ are inherintely going to be viewed by a business owner as less valuable than cash. You can’t pay taxes on Bartercard. You can’t often pay wages, or rent or other costs in trade. But this can be easily used to your advantage and doesn’t suddenly mean they are worthless (or remotely close the claim of one third the value – I can’t speak for Australia but in my experience in NZ, Bartercard are quite staunch in ensuring businesses don’t hike prices for trade).

    If people want to ‘dump their trade dollars’ on us I’ll happily take them. I don’t find any problem in spending them on useful tax deductable expenses. In fact I’m currently in the red with Bartercard & could do with quite a few more.

    • Dave Smyth says:

      Hi Botkel,

      Thanks for your comments. As always, I appreciate the reply.

      Of course, my post wasn’t directed at your business and I don’t think anyone business that uses Bartercard is necessarily “hopelessly managed”. However, Bartercard are offering financial advice to businesses in their recommendations for using Bartercard. To me this means that they should also clearly explain potential pitfalls as well as any benefits. Try going to bartercard.co.nz and doing a search for “fees” (no results) or “tax” (very little information). Bartercard say “…the advantages and disadvantages are similar to ordinary cash revenue or expenses”. This is rubbish. Of course, it hinges on the definition of “similar”. I guess “similar” could allow quite a broad comparison.

      Regarding the number of people in Bartercard, I don’t think this means anything. What would be more telling would be a survey of how satisfied the actual members are. Perhaps I can get hold of a Bartercard membership list and send one out?

      I did acknowledge that there are ways that Bartercard can work but I still think on the whole, it’s not something that is for “every day use”. I was talking to a new client about Bartercard a couple of days ago and it turns out that he had been a member too. He said that instead of getting lots of new customers, many of his existing customers started paying him in trade dollars. Same money, more hassle, more fees! What I will say is that there is no such thing as “saving on cash costs”. Not when it means taking a currency worth less than cash and then paying fees to use it… that is not “saving”.

      Finding ways to spend Barter trade dollars is a recurring complaint and I don’t think it can be put on the business owner. There’s a directory. You look through it. You ring up a supplier and try and use your trade dollars. They then complain that they can’t get rid of their’s and aren’t taking any more and you try someone else. There shouldn’t be a need to “find a way”. You either can or you can’t!

      “The obvious reason that you could move this stock for Barter Trade dollars and not for cash is that not enough people wanted to pay cash for it”
      - Yes this is simple. If you have an alternative explanation, please provide one.

      You said: “If people want to ‘dump their trade dollars’ on us I’ll happily take them”. Excellent! Please provide your business details and I will post them here so Bartercard members can contact you.

      You also said that trade dollars are worth more than I suggest. Ok, so what would that worth be? How about a rough calculation… If there are 13% fees at best (not including membership or advertising fees), then I might claim that they are worth (at best) 87% of face value? At worst? Here’s a scenario…

      Business owner makes a non-deductible purchase and is in the 39% tax bracket. Let’s say the purchase is T$5000+gst or T$5750.

      Bartercard Cash fees – $550
      Bartercard Trade fees – T$100
      GST – $750
      Income Tax – $3676

      Total Cashflow Drain – $4976 +T$100

      You might dispute the income tax figure as it seems so high? This is because the tax has to be added on top of the trade dollars instead of taken off because the Trade dollars can’t be used to pay the IRD. Therefore the cash used for income tax is 39% of the total purchase PLUS income tax, leaving the Trade dollars as after-tax income, not 39% of the actual purchase. Ouch! If you look at it this way, the worst case (let’s ignore the trade fees) is paying $4976 cash to make a T$5750 purchase. If you valued the Trade dollars in the same way as I did above, this makes them worth much less. I’ve never seen Bartercard do any calculations in this way! They are always talking about “buying wholesale” or some other meaningless catch-phrase.

  4. webdesignersareripoffs says:

    So what your telling your customers is that you are a web designer and host website’s etc and you did 30k in sales in that one year for Bartercard trade dollars and from 7500 business’s in New Zealand, that are Bartercard members, that trade quarter of a billion dollars per annum you couldn’t spend that 30k on business related expenses.

    Somehow I find that very hard to believe. Your lying somewhere. And I’d presume it’s one of your first fact’s that you did 30k in extra sales and generated that revenue.

    Especially since when I look in the online directory there are dozen’s of web-designers to choose from including quite a few major web design firms such as Zeald and by the looks of there blog write about the positive’s in business instead of aiming at negative’s.

    The other thing is that web designers have one of the highest margin products/services available where you design a website for 3-10 thousand and anyone with any simple skills could spend 5 to 15 hours designing a website on wix.com and have hosted for roughly $150 per year.

    So the cost to you in taking on that extra job is very minimal and is your labor in the design time. That 5 to 15 hours, or the 100 hours you tell your client you spent on it.

    That is probably why there are dozen’s of web-designer’s as member’s on Bartercard. And if I was one of them, I would tell you Bartercard is terrible as a recommendation because who in there right mind would recommend extra business to there competition that they could get.

    You might as well just tell the customer to call you.

    Yes, the fee’s you mention are correct and I pay them, but I also get use of a trade-broker just like any other member to assist my business in the sales and my purchasing.

    I don’t know if you have ever paid a commission only sales rep but they would at-least charge 13% and I don’t see where the fee’s are advertised on your website for your products and services either? Isn’t that the pot calling the kettle black?

    You probably have missed the boat on this one, and it just never clicked for you. Although you did click slightly enough to get into building website’s as you know it is a very good earner.

    But in term’s of Bartercard, and this trading system. Surly when you did you so called 30k worth of extra sales that you claimed that you did.

    If you thought about it in a positive way you would of offered your existing client base a range of different products such as promotional stuff, pens, business card, vehicle wraps, printing, brochures, signage etc and turned your bartercard dollars back into real money and even make a small margin on it which would pay for your fee’s.

    There is even businesses which make professional video’s to go in website’s and ad design agencies.

    You could buy those service’s in Bartercard and charge your non Bartercard customer’s on your invoice in the real money and that is what Bartercard is all about. Bringing extra business and generating extra income. Suppose your still stuck in the box.

    It is not rocket science but hey, it is not necessary to change, survival is not mandatory.

    • Dave Smyth says:

      Wow, another disgruntled Bartercard member, or employee? That’s three anonymous comments from people saying how great Bartercard is. It’s just not so great that you want people to know who you are, right?

      I’m going to ignore the accusation of lying, because firstly, you don’t have the courage to say who you are. And secondly, because you’re only semi-literate and you might have meant “laying”, as in “on a beach in Fiji”. I’m not, but it’s a nice thought.

      Yes, we did take over $30k in Bartercard and it is more difficult to spend Bartercard dollars on business expenses if you’re a service-based business. I’m glad that there are lots of other web designers to choose from to spend Barter dollars on, that will prevent people from trying to dump them on me!

      Why do people who disagree with something these days also whine about someone being “negative”? Next you’ll be calling me a “Dream Stealer”!

      Web design, like all service industries, have a high margin. Our costs for producing the end product are minimal and the main “expense” is our time. Having said that, my lawyer charges more than three times what I do, my accountant charges double and I believe the guy who comes to fix the photocopier is charged out at more as well. It’s a pretty competitive industry, so hourly rates are not as high as you might think. Yes, there are many, many free/cheaper ways to build a website as there are many cheaper ways to do anything. You can write your own will, do your own accounts or even build your own house. You’re not really making much of a point with that are you? A basic website normally takes me about 15 hours. More complex sites, maybe 35-40 hours. The only website I’ve ever spend 100 hours on was one I built for myself.

      Maybe you didn’t read the whole article but I was showing that the Bartercard fees aren’t the main problem. Go back and read the whole thing again slowly taking note of taxation issues and problems caused by the inherent “value perception” of trade dollars.

      Yes, there are trade brokers who are meant to help. I think we went through three in a year. They seem to wear out and get replaced with a fresh one pretty quickly. It’s one of the recurring complaints from people who have used/use Bartercard.

      I am thinking in a positive way by choosing NOT to use Bartercard. Being able to make a small margin on other people’s services is rarely worth the time and hassle to offer them. I’d rather assist a complimentary business to earn more CASH, not some devalued notional currency that will stuff up their cashflow. It’s not rocket science!

  5. webdesignersareripoffs says:

    I wasn’t born yesterday. You build websites and you are obviously very good at seo, as I googled bartercard wholesale and came up with your site. You could easily build 10 websites to slag someone just for fun. I don’t know you and I manage my risks.

    Your lawyer and accountant invested a lot more time and money than you in education and that is why they charge that much. Your guy that fix’s the photo copier is an employee for a company that has multiple salary staff and multiple fixed and variable overheads.

    Your not stealing anyone’s dreams. But you have angled your article that states

    “If you’re considering using Bartercard, don’t. Put those costs into marketing your business more effectively and get real cash income without all the added fees!”

    Which means you haven’t grasped the concept. I have traded four times what you have and have picked up new suppliers that have turned out to be better than the ones I dealt with in the cash economy. More reliable, better products and when you do sales you get paid on time. This will be due to the fact that the exchange is managed by the Bartercard staff. There are no cowboys like the cash economy.

    So lets have a look at the value perception of the trade dollars as you stated is the main problem with Bartercard.

    So lets put an example together for a company that services photocopier’s that wants a web designer such as Zeald to build a website and you can correct me if you think I am wrong. Both are members of Bartercard.

    Step1) Photocopier servicing company buys a website for 5k Bartercard dollars including GST from Zeald.
    Step 2) Zeald get’s paid the 5k Bartercard dollars for building website.
    Step 3) Photocopier servicing company now owes the Bartercard trade exchange 5k in Bartercard dollars.
    Step 4) Photocopier servicing company does 5k worth of work for other Bartercard members the next month.
    Step 5) Zealad buy’s 5k worth of ad production videos from another Bartercard member in Bartercard dollars and sold to existing client for $6000 real dollars.

    Cycle continues etc etc

    What is the actual cost for Zeald and photocopier servicing company.
    Zeald:
    -Zeald paid employee $25 an hour for 15 hours work building the website for the client.
    - $1000 cost in total.
    - Zeald generated $5000 Bartercard dollars and turned it into $6000 cash.
    - Zeald’s profit in the two transactions= $5000 in cash. ($6000-$1000)
    - Less Bartercard’s fee’s (5000 + 6000 x 13%)= $1430
    - $5000 – $1430 = $3570 profit.

    Photocopier servicing company:
    - They also paid an employee $25 an hour for 25 hours and charged out at there usual rate of $200 an hour. Total employee cost for the company is $625 to generate a $5000 website.
    - 13% margin to Bartercard $1300 for transactions both ways of $5000.
    - Total cost to company for new website $1925. (1300 + 625)

    This is a pretty close to perfect example of transactions however there would be other small costs associated such as vehicle maintenance for the servicing car(available on bartercard), hosting costs for website etc.

    So looking at the value perception of that transaction, I am sure the member that paid for the website in there own services is happy. By being a Bartercard member they bought a $5000 website for an actual cost of $1925. If they are not a member they would have to find that $5000 worth of business to pay for it. That is probably why a third of small businesses in NZ don’t have websites.

    The value perception for Zeald being a Bartercard member, picking up a new client, that has paid on time, and generated a $3570 profit from building a $5000 website for a Bartercard client.

    So as you said:

    “If you’re considering using Bartercard, don’t. Put those costs into marketing your business more effectively and get real cash income without all the added fees!”

    I think it should be re-written more along the lines of, “if your considering spending $5000 on a new website, don’t. Put those costs into marketing your business more effectively and save your real cash income and pay for other services with your own goods or services.”

    The only value perception problem is from business owners like yourself that do not grasp the concept. That is why to you it has no value. 7000 plus business owners have grasped the concept in NZ. To US it has value.

    • Dave Smyth says:

      webdesignersareripoffs – I’m surprised to see you back… whoever you are! Why not identify your business on here so everyone can spend their trade dollars with you?

      I didn’t realise that this page ranked highly for a “bartercard wholesale” search! That must really wind up some people at Bartercard HQ! The “wholesale” claim is absurd anyway.

      Academic Education does have an impact on charge out rates but it’s not the be-all and end-all, particularly in business. Try asking Richard Branson how much his hourly rate is. He’s a high school dropout.

      No, I’m not dream-stealing. My opinion on Bartercard is just that, an opinion. You can take it or leave it, or comment on here. There’s a pile of official Bartercard websites out there designed to dominate searches about it, so it’s hard for anyone to find many negative opinions on it. I suggest anyone reading this checks the facts for themselves, pulls out a calculator and make their own mind up. It’s not like I drew a cartoon of Mohammed or took naked photos of Kate Middleton, I don’t know why you’re all so upset!

      Your “perfect example” with the photocopier company and the web designer is interesting. I’ve already said the process can work IF you can spend the trade dollars as a business expense. However, companies can swap services without Bartercard and avoid Bartercard fees altogether. Also, you’re not refuting my figures on a non-business expense, you’re just ignoring them.

      Good for you if you like using Bartercard. Go for it. I have no objections. It’s not that I don’t grasp the concept, it’s that I see the pitfalls you refuse to acknowledge.

      I already offered to conduct an independent survey for Bartercard on their member’s success. Just give me the means.

  6. theposter says:

    Gents, I wish I had read a post like this before joining Bartercard.

    here is what i learnt.
    1- The greater majority of members are dissatisfied.
    2- you need to change suppliers regularly as members stop taking trade as they haven’t spent it fast enough
    3- companies often have two prices, a discounted cash price and then a Barter price. unless you are using a hair dresser or restaurant you will notice the prices increase. some times as high as 3/4 times the market rate.
    4- members cant leave as they need to spend before they do, this gives the company the impression of having lots of members, they have many clients that are either in too much debt as they wont trade fairly or their product has no value. or too much credit and are waiting on a worth while purchase before they close their accounts.

    There are much smarter ways to invest both your time and money. unless you fancy yourself as a car boot sales man that wants to spend 10 hours a week looking for something of value.

    I recently purchased two holidays and a toy for my son just to get out of the exchange. and obviously the hotel didn’t include drinks and charged us the full peak season rate!! then weeks later i found out the buggy I purchased was faulty and that’s why it was being sold on barter (for double the retail price)

    I don’t normally write on these things but really felt the need this time.

    good luck to all that are still stuck and trying to leave without losing too much money.

    • Dave Smyth says:

      Thanks for your post. This sounds like the same experience I had and similar to what I’ve heard from others. Aside from the other posters above, I haven’t met anyone who says that Bartercard has worked really well for them. Like you, I ended up blowing my trade dollars on things I didn’t need just to get rid of it.

  7. lulubellisma says:

    I have read all of the above blog’s, and want to acknowledge you for taking the time to detail your experience about Bartercard. We have just received an account to leave Bartercard NZ, for which we are disputing. We are new member’s and have not received one single transaction of trade. Our account manager by his own admission struggled with the concept of what our business is. Manufacturing! We plan to dispute the account right down to the personal guarantee they now claim will fall on us. I cannot believe we joined this club. Anyway thank you for your blog.

    • Dave Smyth says:

      Sorry to hear about your bad experiences. Well done for making it through the lengthy blog and comments though! You’re certainly not alone. From the ex-members I’ve spoken to, I believe that there are a huge number of business owners who walk away from Bartercard still carrying trade dollars they can’t spend or like yourselves, having never even made the trade dollars to start with. Even more would have taken barter dollars for some time and lost money due to Bartercard fees and tax costs.

  8. russell says:

    Dave, please send any disgruntled members my way. If they are struggling to turn trade dollars into cash sales they are doing it wrong.
    I have been involved with Bartercard over a number of years and it never ceases to amaze me how people struggle to turn extra sales into a headache.
    My current business is running at around 70% Cash 30% trade and I am taking full trade at normal selling prices on any product or package.
    It is different to the cash economy.
    In the cash economy it is hard to get sales and far too easy to spend. You need to change your way of thinking when joining Bartercard. Sales become easier and spending is something that needs to be worked at.
    My business turned over 18k in trade Across November and December (most recent gst period). I spent 17.3k of it before the end of Dec. Just 300 dollars was non deductible spending. The rest was spent on a whole shopping trolley of business expenses from web design, hosting and internet access to telephony, printing accommodation, hospitality and vehicle hire (we moved premises and the wonderful guys at James Blond rentals hooked us up with a big boy truck.
    Now then. I work bloody hard at my business and I own my numbers. Analysis of spending has shown me that 15k of the trade dollars spent was money I would spent cash on. 300 was personal and the remaining spent portion of 2000 trade dollars was deferred upgrades or “nice to have” items to make work easier.
    My total tax liability from that 18K is on the personal of 300 and the balance of 700. Leaving tax to pay on 1000 trade but 15k CASH saved on the increased turnover.
    All of this has been funded from my cost of trade which actually leaves me around (in real cash terms)8k better off over two months with a tax bill of around 300 dollars.
    Show me a better way to make extra money and I will eat my little green card.
    Anybody wanting to talk to me about how to get top value advertising packages on full trade across a range of media and only pay for guaranteed results should email
    russell@truth.co.nz. Print radio, online and billboard. If I cannot demonstrate in 15 minutes how to make more cash profits in your business using Bartercard I will pay for the coffee.
    I do not work for Bartercard.

  9. Tesrof says:

    We’ve been using BarterCard for just over a year now – no problems spending the BC$, most for direct work expenses and some for home renovations.

    I tend to look at BarterCard as one of the ways to increase our sales. If we were to employ a sales rep they would want a commission of 10% plus some other expenses. This compares very favourably with the total cost of the BarterCard fees – 13% (6.5% to receive and 6.5% to spend). And comes without the problems some sales reps can bring. BarterCard customers pay in full very quickly, cash customers take a bit longer. And very few sales reps come with an established network as extensive as the BarterCard network.

    Before we joined we heard the warnings from people who got caught with too many BC$. In general we did not think they ran their own businesses as well as they could have – ie, had they been a cash only business they would have still struggled … BarterCard gave them another excuse.

    Some have said above that BC prices are inflated; I’ve certainly seen products being sold for a lot more than I would be prepared to pay, but is this a BarterCard thing or is it pretty typical of our economy in general?

    Naturally it is important to control the amount of BarterCard sales we do and I don’t think we want it to be much more than 10% of our total turnover. It is also important to know how a customer is going to pay for an order before accepting their business.

    What happens if we get too many BC$ and can’t spend them? What would we do if we got stuck with BC$ 20,000+? Probably very simple; a) stop taking BC sales for a period of time, and b) look at a holiday in Rarotonga or maybe even BarterCard Property.

    One wise BarterCard man recently told me, “use the BC$ to market and promote your business, aim at turning 1 BC$ into 2 cash dollars.”

    BarterCard is harder than cash to manage but that doesn’t mean it wont/can’t make a valuable addition to a business.

    Cheers

  10. Lazarus says:

    I used “Bartercard is bad” as a search in Google. You got top results.

    One of the things you didn’t mention is DNET (Did Not Enough Trade).

    Bartercard likes to give you credit but if your sales fall below 6% of your credit over a three month period they charge you additional cash fees.

    Lets understand this. Bartercard is not exclusive, they don’t care who joins as long as you pay (cash) to join. You area may be flooded with similar businesses to your own but it is a limited market. Bartercard is easy to spend on lifestyle but difficult to spend on your business.

    Don’t get me wrong my wife and I spent too much while bartercard was doing well but now the directory is about a quarter of the size it was a few years ago. I never turned down Bartercard work but it simply was not there all the time. I tried really hard to do as much as I could and failed. All I get is threats not help.

    I am in the shit now with Bartercard coming after me very aggressively, they cancelled my card and said I couldn’t spend even though I had lessened my debt over the last year and absolutely refuse to spend any of it on lifestyle. Only tax deductible expenses.

    They will insist I pay it all back in cash even though we all know it is barely worth a quarter of what they say. Just today I offered someone $1000 cash for T4000 trade an they jumped at the chance.

    Don’t join Bartercard and get out ASAP. If you have debt; pay it off as soon as possible and leave. I also have no doubt they have a charge for leaving.

    I will probably be devoting a bit of my time in the next few years talking people out of bartercard and I will probably set up some sort of help site with others burnt by this company.

    • Dave Smyth says:

      Wow, really sorry to hear of your bad experiences with Bartercard. I haven’t used Bartercard myself in quite a few years and hadn’t heard of the DNET fees. I know there are a lot more stories out there like yours, so it would be good to hear from others like yourself who are disillusioned by their Bartercard experience. The people commenting on how great Bartercard is are ignoring the fact that while they may have been able to find a way to spend their Bartercard dollars on business expenses, there are many more people who end up getting stuck with them. It’s similar to multi-level marketing. A few benefit, while most get caught out by a system that inevitably fails. If you do start up a website, let me know and I’ll provide a link to it within this blog.

  11. Lazarus says:

    I think the people commenting on how great it is may be TCO’s or their trainers. I used to work for a franchise and while fixing their computers used to hear their spiel for new TCO’s. The examples given above are nearly exactly what I heard during those meetings. I found it hard not snort in derision.

    The other people are probably gold or platinum card holders. If you sell, you get rewarded. I have met so many people proud of their status as a non-green card holder. All I think is how much cash have you spent (lost) on a parasitic company whose sole concern is making you believe you are doing great. The classic gaming reward of achievement for your labour, the rush of feigned success. Its called cognitive dissonance.

    Recent example. A client I worked for was proud he bought a bed on Bartercard for 3k.

    3k bed
    To earn 3k he paid $165 in cash to earn
    Then another %165 to buy = $330 just in trade fees
    Then he paid $300 in GST on the 3k to earn – $630 cash so far.
    Since the 3k bed is not for business he will have to pay tax from between 22% and 38% so lets say 25% or $750 cash = $1380

    I said you could’ve probably paid them $1380 cash for the bed and by passed bartercard altogether. Worse you had to work for $4380 to pay for something that you could’ve probably got for less than half what you paid.

    Bartercard is a waste of time and a waste of money.

  12. Lazarus says:

    I’ll tell you some more things people don’t generally know.

    There is such a thing as a media account where you don’t pay cash fees you pay trade fees although it may be 10% but no cash at all.

    Also I know of companies that only pay 1% in cash fees if they can negotiate a business that is unique and needed IE nt labour but actual tangible goods. I know of ex TCO’s that have negotiated this because they KNOW the right people.

    It is a SCAM! and should be avoided.

  13. Gareth says:

    Great comments Lazarus – very interesting.

    I was sucked in to joining the “Bartercard family” a couple of years ago, it was the worst decision I could have made.

    I’m not going to go in to detail about my situation but I think people deserve to know about the Bartercard scam.

    Has anyone approached Fair Go? They’d be all over this wouldn’t they? Or maybe not.. Fair Go are owned by TVNZ and I think TVNZ use Bartercard – they’d most likely be on a Trade Only deal as you mentioned in one of your comments Lazarus.

    I took Bartercard to court and have a second hearing due. I think I’ve got a good chance of winning my case. The Broker that signed me up was a bit shonky – he filled in one of the documents on my behalf and signed it for me as well not to mention a few other sneaky tricks.

    I really appreciate the encouragement they give to their new members to start spending Trade dollars as well, so much support – it helped me dig a nice hole.

    Hindsight…

    • Dave Smyth says:

      Hi Gareth – Sorry to hear about your bad experiences of Bartercard. You won’t see anything about Bartercard on Fair Go because that TV program is a “consumer affairs show” and only deals with consumer complaints against businesses. They don’t get involved in business to business disagreements. There might be room for a whole new show about those sorts of issues! Let us know how your court case goes. I’d be happy to post the results if you send them to me.

  14. mazif34 says:

    This is an interesting blog to read – I joined Bartercard late last year as another party owed us a significant amount of money so out of desperation I took Bartercard, which is quite common I hear. I then sold a couple of items and have left the “money” sitting there as I am unsure how to spend it or what to do. I always had concerns about the fees and the golden promises, to be honest I think it is a dumping ground for over inflated purchases and the only way to use the $ seems to be to manipulate the system. Now I am stuck with T20k I’m unsure what to do with and a monthly fee. I don’t believe our business bank account should take the brunt for buying and selling and swapping etc, so I will leave the funds frozen for now.

    • Dave Smyth says:

      Thanks for your comment mazif34. As some of the Bartercard members have mentioned above, if you can’t find a way to use the trade dollars as a regular business expense, you’ll need to find a way to shift them by buying something in and selling that for cash. It’s inconvenient but it will be better than paying thousands of dollars out in cash to pay the GST and income tax on your Bartercard trade dollar “profit”. Even if you bring in a little less cash than you spend in trade dollars, you could still be better off. If you don’t manage to get rid of them by 31st of March 2014, you’ll be paying several thousand dollars in real cash to pay the tax on them.

    • jayden07 says:

      Hi mazif34,

      Sorry to hear your experience about bartercard. If you are sitting T20k and not doing anything with it, would you be interested to sell it for cash like Lazarus did? Thanks!

      Jay

  15. Ella Howard says:

    Hi, I am reading this blog with great interest because I used to work at Bartercard (I left about 7 years ago). I was a Trade Broker. I had a list of 128 clients – 2 of who were satisfied Bartercard members. I had clients who Bartercard were threatening to sue because of their inability to pay their fees. I had clients who were sent to the wall because of their fees. I LOVED the concept of trading (it is a great concept), but it is an entirely different animal to make work in a practical sense. The only place Bartercard belongs, in my experience, is in a company where money is no object – and therefore trading is done as somewhat of a sport. Bartercard does not belong in a small or medium sized company because of their fees. From experience, some of my clients had their businesses killed off by the outrageous cash fees. They literally had no idea how in over their heads they were… until Bartercard debt collectors came calling. It was the the ‘funnest place ever’ to work (and that was how it was promoted) – but there was no mercy when it came to their steep fees. Buyer beware – do your homework… and as an ex-employee, I can state unequivocally that Bartercard is not a smart business move.

    • Dave Smyth says:

      Thanks for that insight into the internal workings of Bartercard Ella!

      • Ella Howard says:

        I would just like to add a follow up note to my previous comment, because of other bloggers comments regarding ease of spending trade dollars vs. the struggles that others seem to have. Bartercard accounts are split into ‘key accounts’, ‘regular accounts’ and ‘spend down accounts’. The key accounts are those ‘big’ companies that have the potential to be used very widely by Bartercard clients. These clients are offered the best of deals. The cream of all trades. The opportunities to spend on much sought after services, e.g. stationery supplies, telephone expenses, electricity bills, insurances, etc. ‘Regular accounts’ are not offered (or very rarely offered) these kinds of trades. They simply don’t know these kinds of accounts exist. But they do. But these companies are brought on board to service the ‘more important’ companies that Bartercard wants – and they are specifically signed up for big clients, or so Bartercard themselves don’t have to spend cash… that’s right – Bartercard signs clients up for purposes of paying their own bills on trade – and these deals are never passed down to accounts. Then there are the ‘spend downs’ – these poor souls basically never offered anything. Their cash fees are to be paid up front – or their accounts are frozen. There are countless accounts like these. Bartercard highly favours their big clients, and limits their best deals to them. Conflicting stories of how well Bartercard have treated their clients are based on this. Small use to Bartercard? Small affection from Bartercard. Great use to Bartercard? Great affection from Bartercard. ALL ACCOUNTS ARE NOT TREATED EQUALLY. I am not meaning to ‘have a go’ at Bartercard, just for the sake of it – but you better understand that if you join, you better have mighty deep pockets.

        • mazif34 says:

          Hi Ella, your comments are most helpful to a current member…
          The question is, how does one “quit” Bartercard without door knockers and massive amounts of debt? We currently have T21K to spend which is our own money, with nothing owed to them, but how does one back away gracefully?
          Bartercard, although a good idea in theory, is a dumping ground for items people can’t sell in everyday life. I have yet to find a way to Barter properly and am sick of reading emails from the broker saying that only certain items by said company are on BC, and ‘I’ll have to check as to what they are prepared to do on BC”. It’s like going to Paper + and being told to go to the bargain table in the corner and this is all you have to choose from, which I think is unfair.

          • Ella Howard says:

            Hi, I hear you. And I understand the ‘second rate citizen’ feeling of approaching a company and wanting to use Bartercard. The following are options that may fit your situation:

            1. Bartercard used to sell a few cars on trade. Do they still do that? If so, get a Bartercard mechanic to check it out and buy it – if it is sound enough – and then sell it on Trademe. You could try this approach for as many times as it takes to use your trade… although realistically, it won’t work out dollar for dollar, but at least you can turn your trade into cash. This approach you will need to proactively make work yourself. Call a trade broker (it doesn’t have to be your own) and ask if there are any cars available on trade. If so, ask for details and to visit to check it out. Make this move quickly, and close the deal as quick as you can.

            That is the most ‘profitable’ cash turnaround for your situation. It would convert your trade to cash pretty quickly.

            2. The party line is that they have none of the order business expenses available… but that is not true. You can pay insurances with Bartercard, parts of your phone bills, as well as many other standard expenses – I just suspect that with times tightening that Bartercard is keeping these kinds of spends for themselves. You can ask again about these – but it seems you will likely be told ‘no’ again.

            3. The third way of this is to set up parent-child accounts. These accounts are set up to pay people with (e.g. staff, debtors, etc.) and remove the trade dollars out of the parent account. Therefore, you do not have the fees associated with that account. When the money is transferred into the child accounts you can close down the parent account with all the trade intact – which gives you breathing time to decide how you want to spend. When I was there, a child account cost around $5 a month… no doubt it is more than that now. However, this would be a fairly good situation to be in for you now. You would forfeit none of your accumulated trade – yet you would not have fees associated with keeping and spending that trade. Does that make sense?

            You will always get your trade broker, the branch manager – or sometimes even a visit from the head office about staying on as you intend to leave. It’s pretty much unavoidable. I would quietly go about getting all my ducks in a row if I were you, before that happens though. With your trade in child accounts, however, that’s a fairly mild way to back away :). You won’t incite a visit from that I don’t believe. Fade into the background, show yourself to be stagnant with no interest in growth as you have enough outside of them… sometimes that is enough to make them back off.

            I hope this info has helped you :)

          • Ella Howard says:

            oh, and one more thing… you mention ‘golden promises’ from Bartercard upon joining – I was trained under David Robbins, which was when Bartercard was still in its golden days. His classic sales line was that it is all ‘smoke and mirrors’ and to sell your grandma to get the sale. So don’t feel like you’ve been duped more than anyone else. When I was there, there were around 1,200 new members who joined due to the smoke and mirrors. The trade brokers are trained in the lies… it just takes them a while to figure out they are lying.

  16. NZMentor says:

    Greetings: I am in need of approx NZD 20000 (NZD Twenty Thousand) Bartercard Dollars. I am willing to pay between NZD 4000 to 5000 cash for these. Bartercard Fees can be 50-50.

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