Trade vs. Commerce

Both trade and commerce relate to exchange of goods between two parties.

Trade occurs when goods between two parties have been exchanged for the money or its equivalent.

Trade is a specific subset of all activities necessary to exchange good between two parties.These other activities relate to, for example: transportation, storing, advertising, payment facilities or insurance possibilities.

The important feature of trade is the exchange of money (currency) or its equivalent, e.g. the selling and purchasing of a security. Without it, we cannot say about the trade.

Trade between countries is related to the exchange of currency. In that sense, trade is the extension of domestic economic activities generally driven by industries.

Commerce is not simply the exchange of goods and services, but also all other activities that are essential for the effective exchange like transport, insurance, banking or advertising.

In other words commerce embrace all efforts which are necessary to exchange goods between producer and ultimate consumer. It means, that within commerce you are expected to produce (or acquire) a product, find a customer, execute a trade and report it.

Commerce must be considered in the larger context of the entire economy. It can be treated as a process that is designed to extract financial benefits.

Commerce has six main functions. It creates a link between the producers and consumers. It removes a place and time gap between the producers and consumers. It helps the buyers and sellers in making and receiving payments and provides them with credit facilities. By involving insurance commerce provides protection and compensation to the insured against various types of risks. And finally, through advertising, it makes people aware about the product and related particulars.

In summary:

Both trade and commerce relate to exchange of goods between parties, where trade is a subset of commerce.