Chase Eyeing Youth Market With Online-Mall Partnership

Chase Manhattan Corp. may gain early customer loyalty through a partnership with RocketCash Corp., an Internet payment systems company that runs a virtual mall geared to teens.

Chase is providing merchant banking services to RocketCash through a subsidiary, Chase Treasury Solutions. Parents who want to let their children shop online at the RocketCash mall - which filters out sellers and merchandise that it considers inappropriate - can set up accounts for their children.

Chase spokeswoman Lisa Selkin Lupo said Chase is looking at ways to reach the teen market. The RocketCash partnership, she said, could "evolve into something more, but right now it is simply a financial relationship."

So far 161,000 people have opened RocketCash accounts, plunking down on average $35 to do so. Parents load the account either by sending RocketCash a personal check, money order, or credit card account number. Their children can then shop with about 100 cyber merchants that participate in the RocketCash program.

RocketCash, however, completes the actual purchase using a Visa card issued by Chase. "We buy on behalf of the shopper," said Jeffrey Mason, chief executive officer, president, and co-founder of RocketCash, of Mountain View, Calif. Chase provides RocketCash with a "pool" of Visa account numbers that are used to complete each purchase. But the Visa cards belong to RocketCash, not to the shoppers.

"We are learning a lot about younger shoppers, but over time they turn into good banking customers," Mr. Mason said. "In a general sense, that becomes an attractive thing to a bank."

Jupiter Communications estimates that teens will account for $1.2 billion in Internet spending by 2002. A growing number of Internet companies targeting this market have cropped up, including two RocketCash competitors, DoughNet Inc. and iCanBuy.com

"Our focus is on people who don't have credit cards, or who choose not to use their credit cards for online shopping," Mr. Mason said.

RocketCash, which began marketing its Web site in September, was surprised to learn that teens are not its only customers. Approximately 15% of RocketCash users are over age 18.

"There is still a fear about using credit cards to shop online," Mr. Mason said. "Either these customers are reluctant to shop with cards, or they like the discounts we offer."

Last month RocketCash formed partnerships with Beenz.com and Cybergold Inc., allowing its customers to aggregate the points and money they have earned on these Web sites in their RocketCash account. Other partnerships with loyalty programs are in the works, Mr. Mason said.

Offline merchants are also interested in RocketCash. Mr. Mason said "some major brand" companies will soon offer RocketCash to people who make purchases in their stores.

Michele Pelino, a Yankee Group analyst in Boston, said the relationship with RocketCash gives Chase an opportunity to "get customers early." RocketCash also benefits from its association with the bank, Ms. Pelino said.

"Having a credible financial institution backing you" helps an Internet start-up market to the parents of the children it wants as customers, she said.

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