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 £2bn 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.
Last week, Y-Creds, the UK's leading player was acquired by UKsmart, for an undisclosed sum, believed to be £5.2m. 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 website.
Teenagers will have to register and, says Kevin Sefton head of e-commerce at UK Smart, each transaction will be "age verified". This will prevent a 14-year-old buying a certificate 15 movie. Sefton says the voucher scheme will be in Post Offices by Christmas. The company plans to release 300,000 Smart Creds - £6m worth of "teenage spending power". But it will have to move quickly to achieve market dominance.
Companies like BT and Hewlett Packard are all rumoured to be developing "credit cards for kids" and last month a new company Splash Plastic launched its website at www.splashplastic.com.
Splash Plastic is backed by a number of leading venture capitalists, and financed to the tune of £6m. It uses "top up" swipe cards that can be refilled at the same pay points used by the utility companies.
In the US there are already has a number of teenage payment systems such as CyberMoola and Pocket Card. But Briand Beausoleil, marketing director of Splash Plastic thinks that thanks to the culture of "pay as you go" mobile phones, the UK is an ideal market place for a pre-paid system.
"The distribution networks for paying utility bills like gas and electric are already in place," he says. "This is something that the mobile phone companies are just beginning to tap in to and we want to ride in on the crest of that wave."
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. Beausoleil 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 marketed 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.
