CREDIT CRUNCH

Barter economy back in Panama

06-11-2009 | FATIMA ASVAT

fasvaststar@laestrella.com.pa

A new company offers local businesses the opportunity to buy and sell products and services without spending cash

Panama Star PANAMA. With the current global financial crisis, bartering, a practice that predates any modern form of currency, reemerges as a possible solution to the credit crunch.

With today’s technological advances, this natural means of economic exchange has returned to center stage, with a company from New York able to barter services with one in Ontario, Canada, and now with businesses in Panama.

John Castoro, is owner of the New York and New Jersey franchises of ITEX, a Bellevue, Washington-based company that is one of the leading marketplace for cashless business transactions in North America, handling $250,000,000 worth of deals a year.

With 14 years experience on this business, Castoro and other investors bought ITEX’s web-platform for Latin America, choosing Panama as the launch pad for the venture because of its dollar-based economy.

Initially in Panama to deal in real estate, once Castoro started talking about his work with ITEX, locals encouraged him to set up a similar network in the country.

For the last five weeks, ITEX services have been available in Panama.

ITEX services are targeted at businesses where the variable costs are low, such as hotels, media, and service related businesses. Members of the cashless marketplace can buy and sell products and services to each other using "ITEX dollars" (or credits) instead of real cash.

“The point is, we take your company’s unused capacity, and bring you new business,” said Castoro. ITEX aims to give its customers 5 –10 percent extra business which would not normally take place if dealing with cash.

According to Castoro, these are transactions business agree to “only because it’s on barter.”

Castoro also promises ITEX clients to help them keep their cash, and most importantly, enhance their lifestyle.

Castoro said: With bartering, you do things you wouldn’t do in the cash world.” An example? Castoro indulges in limo rides once in a while, a service provided by one of the ITEX clients in New York and which he would never dream of paying with cash.

Delving on how ITEX works, Castoro said: “It’s just like having another bank account.”

ITEX customers get a checkbook, and 24 hours access to the online service, where they can both list the services they are offering and check out services other clients offer. When a beneficial transaction is identified, clients call a trade director and let them know what they are offering and what they want in return.

The company generates revenue by charging a $20 fee per month (waived when you refer 3 new clients) and 6 percent transaction fee to both sellers and buyers.

Over 50 local businesses, from doctors and lawyers to boutique hotels and restaurants are customers of ITEX’s bartering system, all of which can barter services within themselves and with any of ITEX’s North American clients.