A barter system is a kind of transaction which does not involve money. In this system of exchange if you need any goods or services then you make the payment through goods or services that the opposite party may or may not need. Thus, this exchange is possible only if both the parties can fulfil each other’s needs.

Example:
In the older times before money was invented, if you need 10 sacks of potatoes then you must offer the farmer something he might need. So if you grew sugarcanes on your land you might give him 6 bundles of sugarcane in exchange for potatoes.