The global market intelligence and advisory firm IDC has released a new study that found 80.5% of children and teens under 17 are online, and that more than three-quarters of preteens (aged 5-11) will be online by 2005. Purchases by teenagers are estimated to be $155 billion annually, despite the fact there is no convenient way for them to buy online. Credit cards are unavailable, except when borrowed from an adult, IDC reported. "Early attempts at youth-oriented payment systems have had disappointing results, but innovations in the loyalty program field suggest that a product combining loyalty/incentive rewards, an open-ended payment and exchange system, and partnerships with popular brands may be more successful," IDC said in its analysis. "Financial institutions will be challenged to market a product that is different from what they are used to selling; however, they risk losing future bank and credit card customers if they do not move aggressively."
Separately, IDC has formed a new ePayments service that it says will offer analysis of electronic payments and forecasts. In its first study, called "Beyond Credit Cards: The Future of Consumer ePayments," it suggests that credit and debit cards will not be displaced as the primary means of consumer payment, and that for electronic payments to grow weaknesses in user authentication, prohibitive costs for small payments, and lack of access for teens and people without bank accounts must first be addressed.
IDS is projecting that by 2005 consumers will spend $700-billion online while business spending online will reach $4 trillion.