What does the word "trade" mean in the 1 & 2 definitions respectively?

Question

The context for this phrase is from the movie American Beauty by Sam Mendes. It's a scene where one of the characters wants to show something, which is locked away in his dad's cabinet, to the other character.

"Did you steal his keys? No. One of my clients is a Locksmith. He was short on cash one night, so I let him pay me in trade."

From the context, it's pretty obvious to me what it means. One of his clients didn't have money, to pay him, so he rendered the service of making a key for him, instead. I couldn't find any phrasal verb like "pay in trade" or "in trade" that would fit here though.

Is this a common expression in America? Does the word "trade" in this context mean: 1.some line of skilled manual or mechanical work; craft.(source TFD)?

It confuses me because there is another expression "to take (something) out in trade" which means: 2.To accept something, such as goods or services, as a trade in lieu of monetary payment for something else.

... and in this definition, the word "trade" seems to mean: An exchange of one thing for another: baseball teams making a trade of players.(source TFD)

My question is. What does the word "trade" mean in the 1 & 2 definitions respectively?

Answer 1

In British English, we usually call this "payment in kind" - exchanging goods or services in payment for the same, rather than using currency.

I haven't heard "payment in trade" used, but it seems like a derivation of the above. In this case, the word 'trade' would mean an exchange of something for something else.

I don't believe 'trade' could be referring to their skill as a locksmith, because that would be payment with their trade. "In trade" seems like a substitution for "in exchange".

The second instance is the same - to accept something as a trade means you have exchanged something.