Barterbank in Square Offering Indirect Trade to its Members

John, a tax consultant, wants a tune-up for his car, and he doesn't even have to dig up the cash to pay a mechanic. All he has to do is help Mary with her tax returns, and then Tom, an auto buff, will do the job in return for something else.

Arranging exchanges like these is the job of the Barterbank, 12 Arrow St., a referral network serving the Boston area that opened in Harvard Square in November.

"The important thing to remember about The Barterbank is that it uses a system of indirect barter," Donald J. Magder, co-founder and co-director of the bank, which is presently used by about 60 people, said.

"You don't have to swap one-on-one with the same person, but you can trade your services for credits which you can use to obtain the specific service or good that you need," Magder added, saying, "This system gives you a lot more flexibility than a direct barter system."

Bartering seems to be an idea whose time has come. Barter journals and columns in newspaper classified sections are growing in number. The Department of Commerce estimates that 20 per cent of all U.S. trade will be on a barter basis within the next ten years.


Barter networks have been important to small and large businesses for the last four or five years, Magder said. However, the interest in barter networks among individuals has been relatively recent.

"It's only been in the last six months that inflation and cash flow problems have made bartering attractive for individuals," he said. So far, there are only six or seven networks across the nation like ours which cater to individuals' small daily needs."

A barter bank for individuals has never operated in a city as big as Boston, Magder said.

"Three or four barter networks using direct trade have tried to get started in Boston before, but a lot of people had bad experiences with them because of the direct barter system, and they failed. That's why we're eager to try out the idea of indirect barter," he added.

The Barterbank publishes a bi-monthly newsletter for members, offering the current list of goods and services.

Magder, a 1978 Emerson College graduate, and his partner Stuart Kelter, a 1978 Brandeis graduate, came up with the idea for Barterbank about a year ago. "We were inspired by the large-scale operations and wanted to tone it down a bit," Magder said, adding, "The idea was new, but we'd both been involved in starting small businesses before."

The Barterbank members pay a $15 membership fee for unlimited use of the computerized network system.

"Only a small percentage of our members are students, but colleges can really make use of the service." Magder added, saying, "A lot of students don't have a lot of money."

"Within the next couple of years we expect our membership to be in the thousands," he said, adding. "People are afraid to try us out because it's a new concept."

"Right now we're applying for non-profit status to save on various costs. We never stared the business thinking we'd make a big killing on it." Magder said.