Barter System Barter system refers to the exchange of goods for goods. e.g., If a person exchange wheat with rice. It is a barter system. Drawbacks of Barter system are as follows
1. Difficulty of Double Coincidence of Wants It is not necessary that goods in possession of two different individuals are needed by each other.
2. Lack of a Common Unit of Value It implies that the goods which are exchanged not measured in a common unit.
3. Lack of a System for Future Payments Evolution is difficult thus future payments would not be possible.