Using the simplest comparison possible, what is Parity?
In the simplest comparison possible, consider Parity a zero interest overdraft in a local currency. The credit in this ‘overdraft’ can only be spent with other companies on the Parity network. To repay this ‘overdraft’ you have to sell goods and services to other companies on the network and be paid with their ‘overdraft’. You pay a flat monthly fee to access this service. Once you are on the network Parity acts as a broker to connect you with clients and suppliers to help everyone use their interest free ‘overdrafts’.
I’m a small business, I want to sell through Parity but I don’t buy a huge amount?
I am glad you see the benefits of a local business network, beyond the advantages of interest free credit. However, often one of the main costs for small businesses is the owner’s and staff’s time. With every company account in Parity comes the ability to set up personal accounts for directors and employees. These cannot go negative and you are only able to move positive company balances across. So if your small business sells through Parity, you could pay yourself into a personal account and use it for personal purchases.
What if I go negative in my account and then my company walks away?
Firstly, you aren’t able to access large credit levels until you prove there is a demand for goods and services. So the network has a little protection from companies doing this. However, it will still happen. The contract with us is structured so that we are able to pursue you for GBP Sterling for any negative balances you leave behind on the network. If your company goes into liquidation, Parity will just be another creditor that will need to be paid from what’s left. If you want to leave we can stop you from buying and we’ll promote your offer until you will reach the zero being able to exit.
What if my business needs something not in the network?
One of the services that companies have access to when they join the network is a broker. brokering connects you with potential clients and suppliers that are already on the network. If the network does not have companies to meet your needs, a broker will aim to fill your supply and demand requirements. There are two ways this can be achieved. It would be either finding completely new companies to join the network, or you engage with the companies you already work with about the advantages of Parity. You all get 20% off on the membership fee, so what is there to loose?
Do I always have to pay in Parity?
Parity aims to support greater levels of trade among its members. Businesses can choose what level of transactions actually go through the network. You can pay 100% in Parity, or blend your payments, say 50% Parity and 50% GBP Sterling. You may find that you make connections through the network and go on to do 100% of your future trade in GBP Sterling. That’s fine. You are only required to settle the negative balance before you leave. That’s all you have to do.
I’ve tried to borrow from other creditors, it’s expensive. Interest free credit sounds too good to be true!?
The banking system in the United Kingdom has lost its way. Decades ago bankers were borrowing, they extended credit at low interest and helped small businesses grow. As seen with the problems around the financial crisis and mis-selling scandals, banking has become a casino, focused on short term profits. Parity makes its money from a flat membership fee. Credit in its network is issued interest free, but it can only be spent with other companies who use the system. Parity is on your side to ensure you have clients and suppliers on the network, otherwise it wouldn’t work and we wouldn’t get our fee. A positive relationship with your creditor, who is trying to help you grow your transaction volume, does sound too good to be true, but honestly it’s the truth.
How long is this credit for?
Parity is unlike other creditors, when credit is issued in one company’s account for a purchase, it is debited in the sellers account. We do have an initial 12 month period that we consider a time limit for this credit. However, our focus is less on how quickly you pay back the credit and more on the transactions you are conducting. If you issue credit and then do not sell into the network for the 12 months, it flags up on our system and we will contact you. If you issue credit and are then buying and selling through Parity over the 12 months, then even if you are still negative at the end of it, we are ok with it. See Parity more like an overdraft than a loan and for us, every negative balance is a positive balance somewhere else on the network.
What do you mean by equivalent to pounds?
The credit in Parity is equal to the value of GBP Sterling, but it is not actually GBP Sterling. We would be misleading you if we said you were borrowing GBP Sterling. You are accessing credit that all of the companies on the network accept as payment for goods and services. Prices don’t change within the network and all businesses on the network consider the credit to be equal to GBP Sterling.
Why would my business convert money into your alternative currency?
If this is your question, you misunderstand what Parity is about. We are not a cryptocurrency or local currency, that requires you to “buy” into their system. The credit in Parity is created when companies make trade, when you spend your credit available. It is additional to the revenue that your company currently has in traditional currencies. The aim of the system is to provide a holistic financing solution, to enable you to purchase in supplies with Parity, allowing you to focus your precious GBP Sterling on more important issues.
I still don’t understand where the money comes from?
The traditional banking system requires a lender to have money, before offering credit to a customer. However, there are many other ways that credit can be issued. The Parity Network allows companies to issue one another interest free credit. You don’t need money to begin with, you just need two sides of a trade. The one side goes negative to purchase an item and the other side goes positive to sell the item. The system of credit only works within a closed network. If there is enough diverse businesses accepting the credit as payment, the seller of the item can use the positive balance purchase their own supplies from other companies. The business who went negative in the system, has to sell their own goods and services within the network to settle their negative balance.
Can I exchange the credit in Parity for GBP Sterling?
No, the credit in Parity is issued within the network and can only be spent in the network. Our system does not allow companies on the network to exchange it for GBP Sterling, as this would be outside of the network. However, if a company leaves the network without settling their negative balance, they will be required to settle to amount with GBP Sterling. The aim of this process is to discourage companies from walking away with liabilities, opposed to profiting from the creation of credit.
Is Parity a cryptocurrency like Bitcoin?
No, Parity does not use a cryptocurrency token for its local currency. The currency within Parity is actually credit that is issued and later settled. A cryptocurrency would not work in this network due to its commodity-like value. Cryptocurrency is highly volatile and its price fluctuates. The local currency in Parity will always be fixed at the same price of GBP Sterling.