Commercial Purpose Currencies

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Bernard Lietaer:

"There are a wide variety of commercial purpose currencies that are defined by the kind of exchange relationships they are designed to facilitate or encourage.

The four main categories are:

· Business to Business (B2B); · Business to Consumer (B2C); · Consumer to Consumer (C2C); and · Consumer to Business (C2B).

They take typically electronic forms (see classification by support medium below), and result from the dramatic cost reductions in data processing technologies over the past decades.

Business to Business (B2B):

These complementary currencies usually are exchange units created by businesses to facilitate exchanges with suppliers and wholesale customers. For instance all the contemporary so-called “commercial barter currencies” fall into this category. There are well over 500 such commercial barter systems, particularly in the US, regrouped under two trade associations: the International Reciprocal Trade Association (IRTA) and the Corporate Barter Council (CBC).

Business to Consumer (B2C):

The most widespread complementary currency today are “loyalty currencies”, issued by a business or a group of businesses to encourage client returning to them. “Frequent flyer miles” are the largest such system today, with 1.5 trillion miles issued yearly worldwide by five major airline alliances. One older, and still very common paper-based variety of such system are the ubiquitous “discount vouchers” redeemable for goods or services in retail shops and supermarkets.

In the UK, Tesco has grown to become the largest supermarket chain on the strength of its loyalty currency system which it developed into a fully fledged complementary currency system. Tesco introduced in the mid 1990s a remarkably successful loyalty program that forced rival retailers to follow suit. One in three UK households now are Tesco card members and their Clubcard magazine is Europe’s largest circulation customer magazine.

Consumer to Consumer (C2C):

At some level, one can describe much of the conventional payment system managed by the banks (i.e. checks, cash payments, etc) as a commercial C2C system. Outside of the banking sector, the “pay-pal” payment system is a successful example of this approach extensively used by the e-Bay online auction system, although it is also exchanging only conventional money at this point.

Consumer to Business (C2B):

An interesting innovation by Strohalm Foundation introduced in Amsterdam, the Netherlands, El Salvador, Uruguay and in the South Brazil is what they call Consumer and Commerce Circuits or C3. It is an Internet based system in which some basic rules guarantee sound performance and inter-C3- exchange but most of the details are decided locally.

Consumers buy vouchers with conventional money from the C3 network with a locally established premium, varying between zero and 10% to encourage the consumers to join. The vouchers are used to pay for goods and services provided by member-businesses. The businesses can use the vouchers to pay other businesses members of the network or cash them in at C3 against a small fee (similar to the Save Australia project).

Using this system, businesses obtain customers they wouldn’t get otherwise, and improve customer loyalty in general. The ‘float’ in conventional money accumulated in the system is handled by a local bank that use it to offer low-cost financing for member businesses or projects. Consumers get loyalty discounts and help make decisions about the way their money is being invested in the community because consumers and businesses all get an equal vote in the management of the system; and there are more consumers than businesses. This, and the fact that consumers are initiating the creation of the complementary currency by buying the vouchers justify labeling this approach as a new type of commercial application: a Consumer to Business (C2B) financial product." (