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.
IDC’s new bulletin Insider: Back-to-School Preview of the Upcoming Holiday Season (IDC #B22943) examines how much money will be spent online during the back-to-school shopping season and examines the ramifications for the upcoming holiday season. To purchase the report, contact Demetra Georgakopoulos at 1-800-343-4952 extension 4496 or email@example.com.
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