US teens represent a goldmine for retailers. But teenagers are not old enough to own a credit card. According to IDC, this is an opportunity for financial institutions.
IDC’s back-to-school shopping research shows a new target market.
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 cards are marketed to parents to give to their teens as an alternative to cash or gift certificates.
However, IDC believes credit card companies should work with banks to offer stored value cards to the 15.4 million working teenagers in the US, 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 e-commerce 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.