Get ‘em when they’re young

Apr 01, 1999 10:30 PM  By

How do you sell to kids and teens online when most don’t have credit cards?, a new online service, lets parents use Visa or MasterCard credit cards to set up debit accounts for their children to use for online shopping.

“Only 9% of children and teenagers have credit cards,” says Paul Herman, cofounder of San Francisco-based “So we realized there was a need among 10- to 16-year-olds who like to shop but who don’t have transportation to the mall or access to a credit card for online shopping.” Launched in March, the company aims to establish 500,000 debit accounts by the end of the year.

Herman says parents can set up a minimum ñ20 one-time deposit for their children’s accounts or a minimum ñ5 weekly deposit, similar to an allowance. “The accounts are completely detached from the credit card,” adds president Gayle Keck. “The children are given their own account numbers to use and do not have access to their parents’ credit card numbers. They can spend only the amount their parents have allowed.”

The children can use the money in those accounts to shop from’s 15 affiliates, which include online mall, apparel and accessories merchant, software merchant, and general merchandiser Fingerhut’s site

“We hope to be in partnership with about 50 online merchants by year’s end,” Herman says. “Right now, we’re looking to add music and book providers. It’s free for merchants to join the service, and they agree to give us a share in the gross margin of revenue,” although he won’t disclose the percentage.

Willie Doyle, general manager of e-commerce for, contends that gives parents an opportunity to help their children develop the skills necessary to manage finances: “It’s a very positive, hands-on approach to financial responsibility that goes beyond shopping.” But has yet to determine what percentage of its sales it hopes to generate through, Doyle says.

Herman says his company may eventually branch into a similar service for college students, and an “account profile” service for adults. The latter would be similar to the payment method used by online bookseller, in that shoppers would enter their credit card account number and ship-to address only once,and then use the account for future purchases made with affiliated vendors online. This would prevent shoppers from having to provide that information to individual merchants for each purchase.–MP