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Frequently asked questions

What does the Bay Bucks trading platform do exactly?

We are a third-party record keeper. We record all transactions done on our platform and send monthly statements to all members on their sales, purchases, and balances.

In addition, we provide brokerage services to help members trade and achieve their business goals. We also help members recruit new businesses they would like to trade with into the platform.

Finally, we provide consultancy and educational services to help you and the public understand the benefits of using complementary currencies.

How are items for sale in Bay Bucks priced?

Pricing in Bay Bucks must adhere to the following three basic rules:

1. Equal Playing Field: All Bay Bucks offerings must be priced the same as cash offerings, and be priced 100% in Bay Bucks. Otherwise, if members start to demand increasingly higher prices or increasing partial cash payment, the benefits of membership disappear, and the mutual help culture breaks down.

2. Reciprocity and Generosity: We all want as many products and services as possible available for purchase in Bay Bucks. This can happen only if each member makes available as many of their goods and services as possible. If each tries to limit their offerings to maximize their advantage, this will become a poorer network.

3. Respect the Network: Please do not try to convert your Bay Bucks customers into cash customers.

Are there really buyers for my excess inventory at full retail price?

Yes. The buyers are other businesses like you, who want to reduce their cash expenses by purchasing goods and services using Bay Bucks. They too know that when they make purchases in Bay Bucks, they can realize big cash savings.

Can I really purchase essential services and goods in Bay Bucks?

Yes, because you will be purchasing from other businesses that have excess inventory or extra capacity. For example, after accounting for all work required for existing clients, an accounting firm still has 30% of idle staff capacity. Instead of letting those billable hours go to waste, they will gladly work for you and bill you in Bay Bucks. In turn, they can use those Bay Bucks to make their own essential purchases. Likewise, when a manufacturing company has excess inventory, instead of paying for storage and giving discounts, they will gladly compete for your business and sell it to you in Bay Bucks to move the inventory. It is a win-win for both of you.

What if there are no suppliers I can currently buy from in the Bay Bucks network?

When you become a member, Bay Bucks representatives will take stock of your current and future business needs and will recruit key businesses into the network that can become your suppliers. If you have a preferred supplier, you can tell them about us and get them to join, too. In turn, we will seek to understand the needs of these new businesses and help them recruit their potential suppliers into the platform. It is our job to ensure a vibrant and diverse ecosystem within the Bay Buck network so that all members can realize their business goals. Remember that if you travel, you may be able to pay for your accommodation in Bay Bucks and conserve your cash.

What if I earn more Bay Bucks than I can spend?

Each Bay Bucks member decides how much Bay Bucks to accept each month. Tell us your monthly limit and we will stop referring sales to you when you reach your limit. If you ever find you have more Bay Bucks than you need, you can stop selling in Bay Bucks for a while until you have spent down your balance. One great way to save cash is to pay employee bonuses or parts of their salary in Bay Bucks. Ask us how to structure it so that it is a win-win for both you and your employees. Finally, you can also donate it to a charity for tax deductions.

What is the Bay Bucks credit line?

If you have quality marketable goods and services, you can apply for a 0% interest credit line. The credit limit is based on the value of the goods and/or services that you commit to selling in a calendar month, and it is capped at 10% of the average of your most recent 3 months' sales in cash or $10,000, whichever is lower. The actual credit line given depends on many other factors and is at the discretion of the administrators. This credit line must be paid back in full either through the value of goods and services sold, or in cash if you choose to leave Bay Bucks while still in negative balance. Please note that we will pursue unpaid credit line through the small claims court. This is a community of trust and we are taking considerable risk extending a 0% interest credit line to you. Do not abuse it or we will have to stop this practice.

Is it true that purchasing with Bay Bucks is slower than purchasing with cash?

Yes, purchasing in Bay Bucks may take from several days to several weeks more to transact than cash or credit card purchases. This is because businesses will generally prioritize their cash transactions and only process their complementary currency transactions when they have exhausted their cash sales. This is why you should plan your purchases in advance.

Since you are purchasing excess inventory, it is impossible to predict what items are available for purchase at any given time. The best strategy is to give your broker a long list of items for purchase and buy them when they become available. In this way, you will be able to maximize your trading benefits.

What are your fees?

We have three fees:
1. A one-time joining fee of $279
2. A monthly subscription of $10 in cash and $10 in Bay Bucks
3. Commission on trades:

  • 6% in Bay Bucks when you sell: since we channel new clients to you, this is a super low sales commission
  • 6% in cash when you buy: This is like a big cash saving as your only cash outlay when buying is this 6% fee, and you are paying the rest in money (Bay Bucks) that you won't have unless you are a Bay Bucks member.

You will receive a monthly statement from Bay Bucks showing your cash fees each month. We will charge your credit card a few days after the statement. Please contact us immediately if you think there is any mistake in your statement.

In order to purchase things in Bay Bucks, you must first have a credit card on file with us. Here is a short video showing you how to register your credit card. We do not store your credit card information ourselves. This information is stored by Authorize.net, one of the largest online credit card merchant gateway to ensure security.

What happens if I decide to leave Bay Bucks?

When you leave, you will have six months to spend your balance if you have a positive balance. Likewise, you will have six months to make enough sales to zero your balance if you have a negative one. For large positive balances, you can negotiate for additional time. Any negative balance after the allotted time will become a cash debt and payable on demand.

Can I try to use my Bay Bucks to negotiate purchases with businesses that are not members of Bay Bucks?

Absolutely. They will need to become a member to accept Bay Bucks. Contact us if you want to do this. We will help you convince your supplier the benefits of doing so. This works best when you are negotiating with a new supplier.

Will I have a collection problem if I sell in Bay Bucks?

No you won't. Although bad debt is part of doing business in with cash or credit cards – there are always a few customers who delay payment or even ignore repeated invoicing – there is no such problem when you trade in Bay Bucks. This is because the Bay Bucks trading platform will only authorize a trade if there is sufficient credit to pay for it. You need never worry about collection when you trade in Bay Bucks.

Is this legal? What are the tax implications?

Yes, it is completely legal and well understood by the IRS. You will need to pay taxes on all transactions in Bay Bucks as if you are transacting in US dollars. However, there is little work you need to do to comply. Bay Bucks trading platform will keep all your trading records and send you a 1099B at the end of each year. Here is a quote from the IRS website where it talks about barter exchange:

Trade Dollars
Barter exchanges have their own unit of exchange, usually known as barter or trade dollars. Trade dollars or barter dollars are valued in U.S. currency for the purposes of information returns. Trade dollars allow barter to take place between parties when one party may not have a simultaneous need or desire for the goods or services of the other members. Barter exchanges act as the bookkeeper for keeping track of trade dollars that participants accumulate. Earning trade or barter dollars through a barter exchange is considered taxable income, just as if your product or service was sold for cash.

Some lawyers have suggested that new Money Transmission Act might render Bay Bucks illegal. This is speculative and turned out to be untrue. In 2014 Bay Bucks requested the help of IRTA on this matter. IRTA contact the relevant authority in California and obtained this legal opinion from the California Commissioner of Business Oversight. It clearly states that barter exchanges are exempt from the Money Transmission Act regulations.

What kinds of businesses are involved in barter or complementary currency trading?

It is estimated that 75% of Fortune 500 companies engage in some form of barter trading. Frequent flyer miles, credit card reward programs and store gift cards can all be considered a form of complementary currency. Many small and medium enterprises (SMEs) also use complementary currency trading as one of their business strategies. Given the current economic climate, more and more businesses are jumping on the bandwagon.

What is the difference between your complementary currency compared to reward programs, gift cards, etc.?

Besides allowing you to attract new customers and build customer loyalty, using Bay Bucks will also build vibrancy and resilience in the local economy. This is because all members of Bay Bucks are local businesses. We enable local businesses to trade more with each other, so that the wealth stays in the local community. When you become less dependent on the global supply chain, you also become less exposed to exchange rate fluctuations and foreign economic downturns. When the local economy becomes more vibrant and resilient, you in turn will grow and become more prosperous.

How are you ensuring the stability of your platform?

We have strict rules to prevent free-riders, ie., members who rake up a big negative balance but refuse to reciprocate when their goods or services are needed. If you have a negative balance, you cannot refuse sales. Members who do this repeatedly will be expelled from Bay Bucks, and their Bay Bucks negative balance becomes immediately due and payable in cash.

To further ensure stability, no credit line within our system can be higher than $10,000.

What else can you do for me?

We market your excess inventory to potential buyers within our network. We actively help you sell your excess inventory at full retail price. In the process, we find you new customers who are highly likely to become repeat buyers because Bay Bucks is the place in the SF Bay Area they can go to buy essential goods and services without spending cash. You may even find yourself winning over your competitors' customers because you can now offer a competitive edge.

We also market suitable offerings outside of our network, through larger networks of other barter exchanges around the county and the world. By joining Bay Bucks you gain the ability to reach a global marketplace.

How can I get started?

If you are a locally owned business in San Francisco Bay Area, you can sign up right here.

What are Bay Bucks backed by?

Bay Bucks are backed by the collective goods and services of all its members. That is why your credit line (think of it as your power to create Bay Bucks) is based on the total value of the goods and services you commit to selling in a calendar month.

Can I get cash in exchange for my Bay Bucks?

As a participating business or individual, you cannot exchange your Bay Bucks for cash. You must spend Bay Bucks within the member network. If you are having trouble spending your Bay Bucks, let us know and we will help find trades that make sense for you.

Why are Bay Bucks equivalent to the US dollar?

For tax purposes, we must track members' trade amounts and report them to the IRS in cash equivalent units. For ease of accounting and ease of pricing your offerings, Bay Bucks are kept equal to the US dollar.

How did Bay Bucks get early funding?

We were completely self-funded. Initially, each of the co-founders put in $10,000 of our savings to get it started. As a matter of principle, we do not accept VC or angel funding because we do not want to be forced to maximize profits at the expense of our social mission. If you know of any foundation willing to give grants to such a project, especially if you could put in a word for us, please let us know. It will be much appreciated. Contact: Chong Kee at cktan@baybucks.com

How is the business set up?

It is set up as a co-op with the underlying structure being an LLC.