1. What does the Bay Bucks trading platform do exactly?
2. What are your fees?
3. Are there really buyers for my excess inventory at full retail price?
4. Can I really purchase essential services and goods in Bay Bucks?
5. What if there are no suppliers I can buy from in the Bay Bucks network?
6. What if I earn more Bay Bucks than I can spend?
7. What if I don’t have enough Bay Bucks to purchase what my business needs?
8. Is it true that purchasing with Bay Bucks is slower than purchasing with cash?
9. How are items for sale in Bay Bucks priced?
10. What happens if I decide to leave Bay Bucks?
11. Can I try to use my Bay Bucks to negotiate purchases with businesses that are not members of Bay Bucks?
12. Will I have a collection problem if I sell in Bay Bucks?
13. Is this legal? What are the tax implications?
14. What kinds of businesses are involved in complementary currency trading?
15. What is the difference between your complementary currency compared to reward programs, gift cards, etc.?
16. How are you ensuring the stability of your platform?
17. What else can you do for me?
18. How can I get started?
19. What are Bay Bucks backed by?
20. Can I get cash in exchange for my Bay Bucks?
21. Why are Bay Bucks equivalent to the US dollar?
22. How did Bay Bucks get early funding?
23. How the business is set up? LLC? Co-Op? Why?
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.
What are your fees?
We have three fees:
1. A one-time joining fee of $295
2. A monthly subscription of $10 in cash and $10 in Bay Bucks
3. Commission on trades:
5% in Bay Bucks when you sell: since we channel new clients to you, this is a super low sales commission
7% in cash when you buy: This is like a big cash saving as your only cash outlay when buying is this 7% 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.
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 costs 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 doing all work 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, so 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 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 claim travel, food, etc. as business expenses, you can often purchase these 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 if I don’t have enough Bay Bucks to purchase what my business needs?
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.
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.
How are items for sale in Bay Bucks priced?
Pricing in Bay Bucks must adhere to the follow three basic rules:
1. All Bay Bucks offerings must be priced the same as cash offerings. Otherwise, if members start to price gouge, then the benefits of membership disappear, and the mutual help culture breaks down.
2. All offerings must be 100% in Bay Bucks. Otherwise each member would demand higher and higher percentage in cash, and invalidate the cash-saving benefits of the network.
3. Sellers are not allowed to ask buyers to pay in cash as this undermines the integrity of the network. Imagine what happens if you think you are getting something in Bay Bucks, only to be told it is not available now but you can get it in cash instead. This is NOT OK even if you offer a discount to make the price lower than if the buyer had paid in Bay Bucks.
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:
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.
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 become 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 and even outside of 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.
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 businesses trade amounts and those are to be reported to the IRS in amounts equivalent to cash. For ease of accounting and pricing your items or services, 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-founder 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 [email protected]
How is the business set up? LLC? Co-Op? Why?
Right now it is set up as a LLC. Chong Kee had an LLC that he was about to close down, so he repurposed it to start Bay Bucks with minimal cost. We explored making it into a co-op with Sustainable Economy Law Center soon after but discovered that as a co-op, we are required by law to pay market rate salaries to all working members. Since we were and to date (Nov 2014) are still pay ourselves $0 salary in order to keep Bay Bucks running, we could not legally become a co-op.
Typically, a commercial barter exchange with more than 200 members should be able to start hiring its first full time employee, so we should be able to transition to a co-op soon. However, because our cash fees are half of what a commercial barter exchange charges, and because Chong Kee is the only person working full time on Bay Bucks taking care of administration, IT, member recruitment, business development, brokering and member services, etc., the amount of time he could devote to each of these task is less than optimal. As a result, Bay Bucks’ revenue is much less than a typical commercial barter exchange.
We are looking for a 3rd co-founder who is able to devote full time or close to full time to Bay Bucks, to help us get to 500 members and generate sufficient revenue to make it a self-sustaining project. You will be given full co-founder status and have equal share as the other 2 co-founders when we transition to a co-op. We prefer someone with marketing and sales expertise and of course value alignment for the new economy. Please contact Chong Kee if you are interested: [email protected]