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Teenagers are increasingly prepared to spend their (increasingly substantial) money online, but that's a tough proposition when you don't have a credit card. Now financial services companies are beginning to identify a huge new market that demands to be noticed.
New ways of allowing teenagers to buy in cyberspace are springing up in the US and the UK. If successful, they should prove to be an important stimulus to online sales. As 88% of US teenagers have access to the Internet, the rewards are potentially massive.
According to Jupiter Research, one in six teens between the ages of 12 and 17 already buy online, purchasing CDs, books, games, videos and clothing. In most cases, parents have to actually do the buying with credit cards, an arrangement which both adults and teenagers feel is annoying.
Credit card companies have been experimenting with debit cards which can be used to make purchases online and offline, or even withdraw cash from automatic tellers. Visa Buxx allows US teens to have access to any outlet that accepts Visa cards, while Ecount does the same for Mastercard. Money can be transferred to the teenager's account online using a standard debit or credit card.
Of interest to parents is the fact that the cards can be monitored and restrictions imposed on their use to deter children buying pornography or alcohol. The trouble is that is the very kind of control which US teenagers hate.
An alternative method of empowering teenagers with money is the pre-paid Internet-Cash card, similar to pay-as-you-go mobile telephones. The drawback here is the potential for fraud, and in any case of less interest to retailers and banks since there is no way of tracking consumer habits.
The lack of a complete financial tool for teenagers has led to the rise of re-loadable, pre-paid debit cards - the nearest thing to virtual pocket money. The card can be loaded with money by parents or other adults but can also be taken to local shops and charged up with cash.
Analysts expect these cards to grow in use as quickly as pre-paid vouchers sold for use in mobile phones. They provide parents with the comfort of knowing they can be used only at approved web sites, while giving teenagers the freedom to click on to thousands of online shops.
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