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A Teen Card Plays Up The Fun, Plays Down The Fees
By Yvette Presberry - Prepaid Trends -

To instantly add the latest music single from rock band Pearl Jam onto an MP3 player, Bobby goes online to iTunes to buy a copy of the song. However, since Bobby is only 15 years old, he has to turn to his parents to make the purchase.
Several companies are competing to help Bobby become less reliant on his parents for his shopping needs. New York-based Plastyc, Inc. last week launched the UPside prepaid Visa card aimed at teenagers 13 to 18 years old. Just two weeks earlier, Dallas-based PAYjr introduced its MasterCard-branded card for kids 13 and older.
The renewed interest in teen cards comes despite generally disappointing results for similar cards that have been available for years, notably the Visa Buxx card that was introduced six years ago. Analyst Tim Sloane of Mercator Advisory Group says in a review of the prepaid card market this fall that teen cards "have not seen any significant uptake."

A New Day
But that could change, and a big reason is iTunes and the many other online shopping and gaming sites that teens frequent. Growing demand by youngsters to buy stuff on the Web, including through their mobile phones, could revitalize the teen-oriented prepaid card.
To be sure, teens have cash and spend it on the Web. Online spending by consumers 8 to 21 years old will reach $18.6 billion this year, says Dana Markow, vice president of youth and education research at Harrison Interactive. An online survey this summer shows the dollars mostly come from gifts, allowances and part-time jobs, Markow says.
According to Forrester Research, Inc., a Cambridge, Mass.-based consulting firm, 52% of younger teens have shopped online and 86% of older teens. "The 73 million people under the age of 18 in the U.S. represent one thing to marketers and sellers, the next generation of spenders," says a Forrester report on U.S. youth shopping released in May.

Annoying Fees
A big negative to teen cards has been the fees that many charge. Most charge an initial fee and then, depending on the program, charge for reloading, checking balances, withdrawing cash at ATMs and other services.
Patrice Peyret, CEO of Plastyc, says his company is trying to minimize the cost of the UPside card. Charging high fees to teens, "Who always have the choice to stick with cash handed out by their parents, would be disastrous," he says.
Peyret contends that both versions of the UPside card, Basic and Edge, would be cheaper for the average cardholder than competing cards. And the program offers cardholders $10 gift cards if they collect 1,000 "Upoints" by making purchases and signing up friends to obtain the cards.

"Just Give Them A Call"
Peyret is focused on marketing UPside to the teens, not their parents, offering deals on music and other things they like, and trying to talk the language of teens. The company's Web site includes teen-oriented explanations of how the card works like the following: "Out of cash, but no parents in sight? No problem. Just give them a call and have money loaded onto your card instantly."
Peyret, who has spent several years in a variety of mobile commerce ventures, also designed UPside to be cell-phone friendly. For instance, a cardholder with an Internet-capable mobile phone can access a simplified UPside Web site to check balances or suspend a lost or stolen card.
"In order to reach teens successfully, you really have to market to them in a different way," Peyret says.

UPside prepaid card designed for teens
Business Week

A New York-based company on Wednesday launched a prepaid card that teenagers can use for both in store and online purchases.

The UPside card, which will carry a Visa logo, was developed by Plastyc Inc., a privately held firm. The company's chief executive, Patrice Peyret, who had been involved in the development of the Mobile 365 messaging service, said the new card is aimed at young people age 13 to 22.

"It's our belief that they need something between cash from mom and dad and a credit card," Peyret said.

Credit cards allow consumers to accumulate debt. Prepaid cards, like debit cards, only allow purchases up to a set limit or up to the cash on deposit that's backing the card.

Carles Guillot, the chief marketing officer, said the new cards could be especially useful for a generation that is very Internet literate. Teenagers spend a lot of time online, including shopping, and parents might prefer having the kids use a prepaid card for their purchases rather than borrowing the parents card, he said.

And because the new card will be linked to two Web sites -- one for the child and the other for the parents -- to track balances and purchases, "it also can be used as a safe tool (for children) to learn about finance," Guillot said. A mobile version is planned, he added.

The assumption is that parents will load the cards with money, perhaps even putting their children's allowances on the cards. But the teenagers also will be able to put their own money from jobs and gifts on them.

The new UPside card also will have a rewards program based on deposits and purchases that card holders will be able to redeem at participating merchants.

Visa USA, the card association headquartered in Foster City, Calif., offers its own prepaid card for teens, the Visa Buxx card. It has been marketed primarily as a card for older teens, including those heading off to college.

Fees on the new card will include a one-time activation charge of $7.95 and 99 cents a month as well as 99 cents per reload via a bank transfer. As an alternative, parents can sign up for a flat fee of $24.95 a year. The cost for reloading an UPside card from the parents' credit card will be $2.50.

Plastyc Inks $1.2M For Prepaid Debit Cards For Teens
By Clancy Nolan - Venture Wire -

NEW YORK -- With its prepaid debit card services, newly formed Plastyc Inc. wants to make better consumers out of kids.

The company's soon-to-launch service enables parents to give teenagers prepaid cards that function just like ATM or debit cards. The cards, dubbed "UPside cards," allow parents to deposit money via the Web. Teens can monitor their spending via Plastyc's Web site. And, on a separate portal, parents can monitor spending and suspend card privileges if they choose.

Plastyc recently sealed $1.2 million in seed financing from investors including Eric di Benedetto and Robb Wilmot, VentureWire has learned.

To power the service, New York-based Plastyc is licensing technology from Visa International, originally used in a similar product called "Visa Buxx." Visa Buxx, and similar initiatives by PAYjr Inc., are aimed mostly at parents.

Plastyc aims to leapfrog such products by reaching teenagers where they spend the greatest amount of time: online. "You have to reach them as if they were young adults," said founder and Chief Executive Patrice Peyret.

The company will market its debit cards directly to teenagers at social networking sites and other online hangouts. "There is a very large marketable opportunity [in] the gap between credit cards and cash for kids," said di Benedetto.

Plastyc was created last November by Peyret, co-founder of mobile messaging service providers Mobile365 Inc. Peyret provided solid returns to investors last month when Sybase Inc. agreed to buy Mobile365 for about $425 million. The company had raised roughly $100 million from firms including Mayfield Fund, 3i Group PLC, Draper Fisher Jurvetson and Institutional Venture Partners.