BAY BUCKS 101 AND HOW WE GOT STARTED
WHAT DOES THE BAY BUCKS TRADING PLATFORM DO EXACTLY?
We record all transactions on our platform and send monthly statements to our members on their sales, purchases, and balances. We are a third-party record keeper. In addition, we provide brokerage services to help members trade and achieve their business goals, and identify member needs to recruit new businesses into the network. Finally, we provide consultancy and educational services to help you and the public understand the benefits of using complementary currencies, and we host in-person member networking events.
HOW DID BAY BUCKS GET EARLY FUNDING?
We were completely self-funded. Initially, each of the co-founders put in $15,000 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 or organization 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.
WHAT IS THE DIFFERENCE BETWEEN YOUR COMPLEMENTARY CURRENCY COMPARED TO REWARD PROGRAMS OR GIFT CARDS?
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 IS THE BUSINESS STRUCTURE SET UP?
It is set up as a worker-owned co-op with the underlying structure being an LLC.
what is the difference between your complementary currency and reward programs or gift cards?
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 economic downturns. When the local economy becomes more vibrant and resilient, you in turn will grow and become more prosperous.
what kinds of businesses are involved in barter networks or complementary currency?
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 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.
HOW BAY BUCKS HELPS YOUR BUSINESS
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 goods and services 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 Bucks 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 is the bay bucks credit line and how can it help me?
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. This is one of the best perks of membership, and it is crucial that members do not abuse it.
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, finding you new customers who are highly likely to become repeat buyers because Bay Bucks is the place in the San Francisco 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 networks of other barter exchanges around the county and the world. By joining Bay Bucks, you gain the ability to reach a global marketplace.
We also market suitable offerings outside of our network through networks of other barter exchanges around the county and the world. By joining Bay Bucks, you gain the ability to reach a global marketplace.
BAY BUCKS GUIDELINES AND POLICIES
WHY ARE BAY BUCKS PEGGED 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 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 your cash offerings, and be priced 100% in Bay Bucks. Otherwise, if members start to demand higher prices or 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.
1. Equal Playing Field: All Bay Bucks offerings must be priced the same as your cash offerings, and be priced 100% in Bay Bucks. Otherwise, if members start to demand higher prices or 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.
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.
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; note that your Bay Bucks credits are considered “trade dollars”:
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.”
Note: Some lawyers have suggested that new Money Transmission Act might render Bay Bucks illegal. This was speculative and turned out to be untrue. In 2014, Bay Bucks requested the help of IRTA on this matter, who contacted the relevant authority in California and obtained the legal opinion from the California Commissioner of Business Oversight. It clearly states that barter exchanges are exempt from the Money Transmission Act regulations.
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.”
Note: Some lawyers have suggested that new Money Transmission Act might render Bay Bucks illegal. This was speculative and turned out to be untrue. In 2014, Bay Bucks requested the help of IRTA on this matter, who contacted the relevant authority in California and obtained the legal opinion from the California Commissioner of Business Oversight. It clearly states that barter exchanges are exempt from the Money Transmission Act regulations.
What is your shipping policy?
We encourage all our members to provide either free shipping or charge shipping in Bay Bucks for local delivery within the Bay Area. This way, all our members can enjoy this perk when they buy local. However, if you need something to be shipped out of state, expect to reimburse the vendor directly for the shipping cost in cash. In general, if there is a shipping cost, we advise our members not to ship until it has been paid. Please check with each vendor about their shipping policy before purchase. Some may not ship at all.
how are you ensuring the stability of your platform?
We have strict rules to prevent free-riders, i.e. members who accumulate a 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 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.
can i get cash in exchange for 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.
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.
