It’s a trading system that doesn’t require conventional money. When you join, your business is listed in the directory, where you add what you’re offering and what you want. When you’ve added your offers and wants the directory automatically proposes possible trades for you, suggesting new suppliers and customers. If you upgrade your directory listing and become a Trading Member, you get an account with a balance of zero and a £500 credit limit in OCN Credits, enabling you to trade with other businesses in the network. When you buy from another member, their account is credited, and your account is debited by the same amount When you sell to another member, your account is credited (your account balance is increased). There are limits to how far you can go into credit or debit. That’s it as far as the basics are concerned.
There are lots of benefits, mainly around cashflow but The Open Credit Network has bigger implications too. Potential customers can find you, contact you, and pay you in mutual credit or in conventional money – or you can pay with a mixture of the two. You can find new customers, and they can buy from you even if they have no money, and you can buy from suppliers, even if you have no money, with no interest to pay. It’s very difficult for small businesses to get credit from banks, and The Open Credit Network provides a way for businesses to allocate credit to each other. By transacting in mutual credit, instead of conventional money, you can avoid bank fees, and interest payments and help co-create the new economy.
Create your free directory listing here. Add the products and services you’re offering, so that potential customers can find you, plus the products and services you want, to discover your potential matches – it’s FREE and only takes 60 seconds to sign up.
Anyone can use the directory to find businesses to trade with using conventional money. Simply search the directory, contact the business and tell them you found them via OCN! If you want to trade with another business using mutual credit look for businesses which have a ‘trading member’ icon in the top right of their profile, like this:
Once you have found a Trading Member you want to trade with click the ‘Trade with this business’ button to trade with them in mutual credit. The first time you do this, you’ll be asked to sign up as a trading member. When you’re accepted as a trading member, you’ll get a ‘trading member’ icon too. When you initiate a transaction (to buy or sell) the other business will be notified and, if they accept the transaction, the account balances of both accounts will be adjusted accordingly.
That’s up to the two parties involved in the trade – just as with conventional money.
You can contact us to raise a dispute, which will be mediated by members, after which a trade can be reversed, if the transaction is found to be invalid.
How do I know I can trust the other members? How do I know they won’t run up a large negative balance, then abscond?
You can trust people in OCN because the credits they earn in the marketplace can only be spent within OCN. If they get a bad reputation, no-one will trade with them.
Although you can spend even if your balance is negative, there are limits. We agree maximum positive and negative limits for each user, which will depend on many things – particularly on the size and turnover of the marketplace and the user’s transaction history. If the user has special circumstances – like an injury, or family problems, then their fellow traders may grant them extra credit – e.g. allow them to spend more now and pay back later. So no-one goes too far into the negative.
If someone borrows conventional money from you and then runs away, then of course you have a problem. But if someone has a negative balance in a mutual credit scheme and runs away, everyone who has been paid still has their units. Everyone carries on as before. Arguably the community as a whole has ‘lost’ something – but because the size of negative balances is not allowed to get too big, the system absorbs the negative without anyone suffering directly.
At the moment, the OCN Admins set a flat £500 credit limit. In future, credit limits will be increasingly based on an analysis of the productive capacity of your business. Exactly how we do this is to be worked out, and it will be determined by members.
You still need to pay taxes, just like trades in conventional money.
How do I enter mutual credit transactions in my accounts? How does my business account for mutual credit?
Treat it exactly the same as conventional money. You don’t need an extra column in your books, any more than you need an extra column for Paypal payments or bank transfers. It’s just income or expenditure. Your accountant doesn’t need to separate it for your annual accounts either. See this article for more information.
You can pay it to your suppliers or receive it from your customers in mutual credit or conventional money, although of course you have to pay VAT to HMRC in conventional money. You can have ‘blended’ trades (a mixture of conventional money and mutual credit) so that you obtain the conventional money to pay HMRC. But also, if you can pay your suppliers in mutual credit, you can keep your conventional money for essentials like payments to HMRC.
Not at the moment, but in the future, there will be an annual membership fee (in sterling) and transaction fees (in mutual credit). A key aim of The Open Credit Network is to keep fees as low as possible. We’re a co-op, so we don’t have to maximise returns to shareholders. When we’re a fully-fledged multistakeholder coop, members will be able to vote on how fees are set.
We use sterling as a measure of value because everyone has a similar idea of what one pound is worth and because that’s the unit UK businesses do their accounting in already. If the pound became unstable (if there was significant inflation or deflation, for example), we would be able to define another measure of value that suited our members better.
We founded OCN because we understand how money that is created as interest bearing debt is the root of all evil – at least most political and social evil!
OCN is a network of businesses that understand the problems of money that is created as interest-bearing debt and are co-creating a new economy by trading without money. Instead of trading with conventional money we just keep track of how much everyone has given and received, and trust that each member will settle up before they leave.
Mutual credit cannot be used to pay bank debts or taxes, and is much harder to spend on international goods made in sweatshops. But In some ways it is superior to conventional money – it is created for free as needed, it helps build trust and localises economies, as well as providing numerous benefits to members.
Because we believe in democracy, and we want as much value as possible to stay in the network, rather than being extracted to pay shareholders. We believe that by making the Members the owners of OCN, with an active say in how it is run, we can create a new, democratically-governed economy – the likes of which has never been seen before!
So that other mutual credit networks can use our software to replicate OCN in other countries. Our vision, and ultimate aim, is to co-create a global ‘Credit Commons’ – an international network of mutual credit networks which enables democratically-governed trade between anyone, anywhere in the world.
Yes. Its credit limit will be directly related to the transaction volume of the network – i.e. its productive capacity. The OCN account will operate under the same rules as any other member.
The administrative account is visible to all members. The admin team is the servant of the network, and subject to democratic control.
Yes it can and it does work – mutual credit networks have been working all over the world in different forms for more than 90 years. Sardex is a business-to-business credit network in Sardinia, with trades worth the equivalent of over 43 million euros in 2018 – on an island with the population of Birmingham!
The WIR Bank started in Switzerland during the depression in the 1930s. In 2005 there were trades equivalent to 6.5 billion swiss francs (about £4-5 billion) – but with no money involved.
Also, in the 1960s and 70s, commercial barter schemes and trade exchanges developed that allow large businesses to trade by offering trade credit to each other, avoiding interest on bank credit. Commercial exchange brokers make their money from fees and commissions, and are overseen by the International Reciprocal Trade Association. Some are huge – like Bartercard – but they’re for-profit and not democratic.
With conventional money, only banks are allowed to issue credit, and they only do so if you pay them back with interest. In a mutual credit network, members issue credit to each other. Members actually benefit from issuing credit because it means they receive something now and pay for it with their goods and services later. Of course on the other side of that transaction, somebody is giving something now in the expectation of receiving something later. This kind of ‘trade credit’ is available automatically and interest-free because it costs nothing to create, the risk is low, and usually the volume is small. This credit arrangement brings free, instant and convenient liquidity to the network.
Conventional money isn’t easy. Cards and cash have handling costs; customers often need to be chased – several times, and small businesses often worry about cashflow.
Mutual credit money is not scarce and can’t be stolen, so trading with it is much less stressful and can even lead to better trading relationships.
Mutual credit is very useful in places and for people who find it difficult to get access to enough money to get what they need.
The wider benefits of mutual credit, in that it helps build a new kind of economy, imply we should all switch to using it as much as we can!
Whenever you take a bank loan you are helping to power the existing, extractive, economy. Mutual credit is a more collaborative, more available, and more ethical option.
Banks aren’t keen on lending to small businesses – so they set high interest rates, but you don’t have to pay interest with mutual credit.
Imagine you’re a restaurateur, with tables you can’t fill, because potential customers don’t have any cash handy. Accepting mutual credit can give you access to new customers, who suddenly don’t need to have money to become your customers. By accepting mutual credit, you can fill those tables. And if you’re having a bit of a cash flow problem that prevents you from buying stock – again, you can trade without conventional money from suppliers are in the network. You’ll be part of a network of trusted businesses, who may well prefer to trade with you, because they know they can trust you, and they can keep their conventional money for things they can’t source via the OCN.
The only time mutual credit actually does anyone any good is when it changes hands – the rest of the time, it does nothing at all. So holding on to credits is not in your best interest – or in the best interests of the community. Go ahead and spend it! You don’t want to save too much because there are no interest rates – you don’t earn money on your balance, as you might if you have money in the bank. Similarly, you don’t pay interest on your negative balance, so your negative balance doesn’t get worse. And there’s no bank to chase you for the money. Your negative balance indicates your commitment to the community to provide your goods and services.
Yes. We believe that by shifting the power to create credit from banks to small businesses, we will build a more sustainable, resilient and democratic economy and society.
We may look to add a new mechanism in the future to provide a viable and effective store of value which helps businesses support each other, but for now the OCN is set up to provide an effective means of exchange, not a store of value.
Conventional money is a good store of value because the government guarantees it over a long time and because you can rent it out and earn interest. Mutual credit in trade exchanges is intended to circulate and increase business trade, so there isn’t an incentive to save it. The best thing you can do with credit is spend it back into the system, converting your surplus into goods which you can then store and/or sell for money.
There are problems associated with ‘money’ that is both a means of exchange and a store of value. Saving legal tender takes it out of circulation, so that there’s less to trade with. Having the exchange medium as a store of value means that it will tend to accumulate in the hands of the people who have most of it, and it will eventually concentrate in the hands of very few people. This has already happened, in fact. When wealth is so concentrated, it can be used for political donations, to provide cushy jobs for politicians, and to fund a huge lobby industry, all of which has enormous implications for democracy – and, in fact, prevents real democracy.
A mutual credit system is intended to provide a source of liquidity, i.e. spending power, that is independent of the banking system.
There’s no compound interest involved in mutual credit – which removes the need for the economy to grow perpetually. Removing the growth imperative from our economies will help us to live more sustainably, which may just turn out to be the most important benefit of mutual credit.
No. It’s just a tool – it’s apolitical. There are libertarian elements on the right that have been proponents of choice when it comes to money. For the left, it takes power away from giant corporations and banks. Even anarchists like it because all the credit in the system comes from the producers and is controlled by the producers. And for both left and right, it builds resilient communities that generate trust – something that we all need. We’re not concerned about ideology. We’re concerned about practicality – what works, what’s going to make things better.
We believe that the current economy damages nature and concentrates wealth, and that the heart of this economy is the debt-based, bank-controlled money system. All we can do right now is to try to build a viable alternative, business by business and community by community, to develop a parallel economy that can be resilient to economic collapse. We’d like to contribute as much as we can to building the global Credit Commons, to challenge the current system.