From...

September 23, 1999
Web posted at: 1:29 p.m. EDT (1729 GMT)

by Megan Barnett

(IDG) -- The July issue of young money, a bimonthly financial magazine targeted at teenagers, includes a story titled "How to Make Money in a Down Market." It tells kids about short-selling stocks. Other stories include "Warning: Bull Market Bears Down on Taxes" and "Internet IPOs Take Off Like Rockets."

Surprised? Teens apparently are more financially savvy than ever before. They've got money and they're online. But they're still teenagers, and while merchants are eager to bring them aboard the e-commerce train, credit card companies are reluctant to dole out credit to minors.

Market-research firms are bold in their predictions for teen spending online: Jupiter Communications estimates that as the population of teens online doubles by 2002, teen e-commerce spending will soar to $1.2 billion from $58 million in 1998. But exactly how teen e-commerce could grow that much was unclear – until now. A new category of companies has emerged in the past six months that aims to let teens shop online and learn how to manage their money. And a wealth of Web resources is teaching them the value of the dollar.

"We're providing financial training wheels," says Paul Herman, CEO of iCanBuy.com, a site that enables teens to open joint bank accounts with their parents and then spend the money at certain online shops, give it to charity or save it. The company plans to add mutual-fund investing and, eventually, stock trading. "Parents will have a choice as to whether or not they'll need to authorize transactions."

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Of course, parental involvement is an important consideration. Because most teens don't have credit cards, the majority of these sites offer payment solutions that require parents' credit card information. And teenagers won't shop just anywhere on the Net; the companies partner with merchants that teens favor, and some of those sites give parents discretion over which shops their kids can visit. The sites also give parents control over the amount kids can spend on one transaction, the time spent online and even the time of day kids can shop. It's essentially a virtual allowance, with encouragement to spend it wisely.

Another concern: Just how much personal information should merchants be able to obtain from teenagers? Parents worry that merchants will take advantage of teens with gimmicks or promotions. But merchants want to own customer information, and teen-shopping sites that deny merchants access to personal information will likely have a hard time attracting the kind of merchants teens want. Sites popular with teens, including Amazon.com, J. Crew and Delia's, want to know who their customers are.

"Merchants want to develop their own relationships with their customers," says Jeffrey Mason, CEO and president of RocketCash. Bombarding customers with sales gimmicks is shabby, he argues, so why not let the merchants have access to the information?

It is impossible to protect kids from everything, online and offline. Sure, a 14-year-old can use a $5 gift certificate from Amazon to buy an inappropriate book or video with his parents' credit card through these sites. But chances are his parents will see the transaction record and he'll learn his lesson.

Dropping the same 14-year-old at the mall for three hours with cash in his wallet may offer more opportunity for mischief.

Helping Your Kids Click and Spend

Company	Payment Product
AllowanceNet	Targeted at 8- to 14-year-olds, the site lets kids earn and spend virtual currency.
CyberMoola	A prepaid cash card will let kids pay with cash at a brick-and-mortar partner (not lined up yet) and spend online, or get a prepaid card online from a parent's credit card.
DoughNet	Parents provide credit card information and set parameters, then teens and parents can open a joint checking account with U.S. Access Bank.
eCharge	Parents with an eCharge account can set up prepaid accounts for kids.
iCanBuy	Parents with credit cards can set up an online debit account, then sign up for a joint parent-teen account with Security First (SONE) Network Bank.
PocketCard	Parents pay for a debit card and can set up spending accounts for kids.
RocketCash	Parents input credit card information for a designated amount, then kids click and spend.