Is running a link exchange service bad for your site, does Google penalize you for this or does it have any bad side-effects at all ?
Many people say you will get penalized for link exchanges, but I don´t really believe this. They do seem to be less effective than they used to be though.
Direct link exchanges and 3-way links have become depreciated. If done of a huge scale they can get you penalized; otherwise they just waste your time.
Link exchange has become not very popular now. One way link submission is better. You do not overload your site with others' links, But placing your links to other sites will be good.
Nowadays three-way link exchange is the best. Definitely you'll be penalized for more link sales, if Google finds you.