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Monday, November 27, 2000
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... and kids get one abroad
by Sean Dodson

THEY are the consumers who feel most comfortable with online shopping. They have lots of disposable cash, like buying computer games, books and CDs and have plenty of time to shop around. They are potentially the Net’s best customers. But without credit cards teenagers cannot buy goods from the Internet. That is, until now.

The way for e-tailers to tap into a market, which KPMG estimated as being worth $ 2.86 billion a year lies in an idea, culled from pre-paid mobile phones. Most UK providers will lease a mobile phone only to a credit card holder. But most playgrounds and common rooms in the UK are abuzz with teenagers’ text messaging each other; most using "pay as you go" vouchers bought in shops.

Y-Creds, the UK’s leading player was recently acquired by UKsmart, for an undisclosed sum, believed to be $ 7.43 million. The company announced that it has set up an exclusive deal with the post office to sell its pre-paid vouchers over the counter.

 


Y-Creds has been operating a teenage payment system since January. This depended on parents or guardians "uploading" money from their credit cards. With the new system, teenagers will go to the post office, purchase a card, scratch off a hidden pin and then enter the pin number on to the Y-Creds Web site.

Teenagers will have to register and each transaction will be "age verified". This will prevent a 14-year-old buying a certificate 15 movie, Kevin Sefton head of e-commerce at UK Smart told The GNS

Sefton says the voucher scheme will be in the post offices by Christmas. The company plans to release 3,00,000 Smart Creds - $ 8.58 m worth of "teenage spending power". But it will have to move quickly to achieve market dominance.

Companies like BT (British Telecom) and Hewlett Packard are all rumoured to be developing "credit cards for kids" and last month a new company Splash Plastic launched its Web site at www.splashplastic.com. Splash Plastic is backed by a number of leading venture capitalists, and financed to the tune of $ 8.58m. It uses "top up" swipe cards that can be refilled at the same pay points used by the utility companies.

Unlike Y-Creds, Splash Plastic has no barrier to entry and no need for registration. This does not mean that teenagers can then go off and download a load of porn from the net. Splash Plastic will work only with a number of authorised partners. Briand Beausoleil, marketing director of Splash Plastic is being very coy about who those partners actually are.

Beausoleil says Splash Plastic will be available in the shops in January. A pilot scheme will run in Edinburgh, Brighton and Birmingham next month. Already 20,000 retail points have signed up to Splash Plastic, with another 40,000 in negotiation. If all goes to plan, the company will launch early next year with nearly twice as many retail points for their cards as there are National Lottery terminals.

Both companies stress that their systems are targeted at teenagers but there is no age limit to entry. And with nearly one in four of UK citizens unable to get a credit card, it might not just be teenagers opting to pay as they go on the Net.

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