Q: I am speaking with a business attorney about joining our barter exchange network. He wants to investigate the ethical aspects of “paying a fee for a referral” which is what happens if we bring him business and he pays us. I once saw a post you made about attorneys and barter… Any thoughts on attorneys paying a transaction fee?

A: Attorneys and doctors may have an ethical issue about paying referral fees, as it has the potential to be looked at as a conflict of interest. In addition, for attorneys there could also be issues with their Bar Association. I have heard this question many times from many attorneys that have a concern about referral fees and being in violation of the Bar.

Factually, barter exchanges do not charge or collect referral fees. A barter exchange is a business network with a payment platform much like the credit card industry. Members of a barter exchange business network pay a cash transaction fee each time they make a sale and earn barter dollars in the exchange that are deposited to their barter account. They provided a service to a member, they were paid in barter dollars, and the exchange charged a transaction fee, which is no different than if they were paid by Visa, Master Card or American Express, which charges a 2.2% to 3.8% fee + transaction and monthly fees for processing their charge.

The added benefit of being a member of a barter exchange, as compared to just accepting credit cards, is that the exchange also provides marketing, networking and advertising to a member at no additional charge, so that members end up getting new business from new customers that they ordinarily would never have had.

Members also pay a transaction fee when they spend their trade dollars, which is paid to an exchange for the service the exchange provides to help business reduce their cash requirements for purchasing, so they can pay for the products or services they need at the cost of their own products or services.