Saturday - September 9, 2000

Teen Online Payment Options Could be Gold for eTailers

U.S. teens continue to represent a gold mine for retailers. The challenge for online retailers to tap into this opportunity is to offer an online payment option for the teenagers, who are not old enough to have their own credit card. According to IDC, the teen payment issue is a problem for online retailers and an opportunity for financial institutions. IDC's back-to-school shopping research shows a new target market and an untapped opportunity for financial institutions.

Several companies, such as MasterCard, are offering prepaid credit cards. They work in much the same way as prepaid phone cards -- with a finite amount of cash paid in advance. These prepaid credit cards are marketed to parents to give to their teens as an alternative to cash or gift certificates. However, IDC believes that MasterCard and other companies should target the 15.4 million working teenagers directly.

According to IDC, credit card companies should work with banks to offer stored value cards as part of their teen-focused banking packages.

"Banks and credit card companies working together is a winning situation for everybody," said Keith Waryas, research manager, IDC Consumer eCommerce Core research program. "It will simplify putting more money on the card for teens. Banks will be adding extra value to their offering, making them more attractive to potential customers, and credit card companies get early exposure to possible lifelong customers."

The biggest winners, however, will be online retailers who will get access to a large percentage of the population that was previously closed off to them.

Internet Becoming a Staple in U.S. Education
U.S. school children of all ages are riding the information superhighway in their pursuit of education. According to a recent IDC survey, more than three-fourths of U.S. PC households with students are accessing the Internet, and almost 70% of online households with students are using it to complete school work.

"The Internet is clearly reshaping the education of K-12 students," said Raymond Boggs, vice president at the Framingham, Mass. research firm. "Students are going online to get assignments, get the information they need to complete assignments, and, of course, check the lunch menus."

IDC found that households with students are more likely to have PCs than households in general. At the beginning of the year, 52% of households had PCs, compared to 65.4% of households with students. While roughly three-fourths of all PC households, with and without students, have Internet access, students are helping families to justify the investment in both PCs and access to the Web.

Use of the Internet to Complete Schoolwork
in Different U.S. Online Households:
Total Internet Households.....................................................55.4%
Internet Households with Students.........................................67.9%
Internet Households with Elementary Students.......................52.7%
Internet Households with Middle/High School Students..........84.0%

Internet use varies widely by student age. While fewer than 53% of elementary school children with home access to the Internet complete schoolwork with online resources, the percentage increases to 84% of middle and high schools students. The nature of school assignments and the greater freedom accorded to older children to explore the Internet on their own help account for the difference.

The most common online school-related activity in households with children in elementary school is to communicate with teachers and administrators. Parents would play a key role in this. In households with middle or high school aged children, the most common use is to get class assignments. The student rather than the parent would be most likely to be gathering this information.

"The Internet is also poised to become a key force in community building between school and the home," Boggs said. "A variety of activities are already being performed online, and Internet use will continue to grow dramatically as teachers and administrators expand their use of the technology for a variety of purposes."

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