Paying and playing on the Net

Although teenagers have a yearly disposable income of £16bn, they have been slow to take up e-commerce because of inadequate payment methods

The ever-growing numbers of Internet-using teenagers in the UK have begun to spend a significant amount of their vast disposable income over the Web, and are spending much more time online than ever before. It is estimated that by 2004, the proportion of teenagers buying online will be 49 per cent, an increase of a 188 per cent since 2001.

A report by PrePay Technologies, which provides pre-paid Internet services, called UK Teens Online, says that 2001 was a turning point for UK teenagers to enter the world of e-commerce.

The report highlights that, of the 5.2 million 12to 18 year-olds in the UK, some 85 per cent have used the Internet more than any other age group. This group also spends on an average 630 minutes a month browsing the Web. As a consumer group, teens have huge spending power, accounting for about &£16bn a year. The majority of this money is spent on music, computer games, videos and clothes, which have become the bread and butter of mainstream e-commerce. But what is interesting is that, even though almost 80 per cent of all teens say that they want to shop online, there are often barriers preventing them from doing so. One of these barriers is that many retailers only accept credit-card payments, which are off-limits to those aged under 18.

This problem may account for the slow uptake of online shopping among teens. Though nearly 68 per cent were using the Internet two years ago, only 11 per cent were actually buying online. However, the number of teen online shoppers increased to 17 per cent last year, and PrePay Technologies expects this number to grow even more dramatically over the next few years, as accessible payment methods become more widespread among teenagers. The research adds that Internet usage among teens is expected to level off at 89 per cent within the next two years.

For teens, price is often the biggest draw to online shopping. Although teens are very brand conscious consumers in the offline world, online buying decisions are more likely to be based on value for money. More than 50 per cent of teenagers believe price is the most important consideration when buying online, followed by website design and brand name, at 16 per cent and 14 per cent respectively.

The inability of teenagers to pay autonomously or, at least without the intervention of a parent, has been a major barrier to teenagers’ online buying. UK e-commerce is heavily dependent on credit cards, and sites that do not accept alternative payment methods effectively shut out most teenage buyers.

Though the Solo Card is familiar to 59 per cent of teenagers, comparatively few (seven per cent) have actually used it to make an online purchase. Arguably, this is because of the relatively low penetration of Solo among online retailers, as well as fears about divulging bank details over the Internet. Security is an often-cited concern among teenagers, and the prospect of using a card that is directly linked to a bank account is a daunting one.

The most used payment method for buying online is still a parent’s credit card. However, awareness among teenagers of alternative payment methods, which allow them to buy independently, is increasing. The three leading teen-specific payment methods in the UK – Splash Plastic, Smart Creds and Dubit – have established significant awareness among teenagers, even though these payment methods appeared only relatively recently. Some 21 per cent of teenagers have heard of the Splash Plastic payment method, with five per cent having used it to buy goods online. In addition, 20 per cent have heard of Smart Creds with just under one per cent having used it to buy something online.

However, the research concludes that the online teen market is an increasingly important one in the UK, and has yet to reach its full potential, even though the traditional barriers to teenage online shopping are steadily being overcome, and a steady, rapid, growth is being experienced.

Teenagers are in many ways the ideal customers, with 90 per cent of their income being disposable and their expenditure being remarkably resilient to most economic fluctuations. Since a majority of teenage purchases are of products that are widely available online, the teen market is one that can no longer be ignored by the UK’s online retailers.


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