Teens' Money Is Online Gold

A new report says that teenagers in the United States and Europe are spending nearly half a billion online, and forecasts call for teen spending power to top $10 billion in online purchases by 2005.

The report from independent market analyst Datamonitor, entitled “Online Teen Payments,” looked at teenage online spending across the U.S. and seven EU countries and found that teenagers spent $483 million online last year.

Datamonitor said that that teenage payment systems, such as prepaid plastic cards (Visa Buxx is just one example; MasterCard also offers a prepaid product), are currently provided by only a handful of suppliers.

“As such, the sector is lucrative, but marketing and advertising to teenage consumers is likely to prove difficult and operators should look to tie-in with larger teenage-friendly brands,” the company said.

The report concludes that a market exists for an alternative payment system targeted at teens (i.e. those who cannot apply for a credit card) and that Web merchants must integrate new solutions if they want to target the teen market. Although teens can make purchases indirectly using a parent’s credit cards, the buying experience is not the same due to the loss of independence for the teenager, Datamonitor said.

“Payment providers must take responsibility for the product that they are providing,” said Julie Cunningham, Datamonitor financial services analyst. “In giving teens a card of any sort they are familiarizing them with plastic. However, it is does not necessarily follow that they are encouraging a debt-ridden society. Prepaid cards reinforce the idea of using plastic to pay for what you can afford, by only allowing transactions where there are sufficient funds loaded onto the card…”