Teenagers are spending millions on-line across the EU and the US, according to market analyst Datamonitor. Arguing that all teen income is disposable and that teenagers are the most likely group to pay on-line, it considers the lack of teenage payment systems to be a potentially lucrative gap in a fast-growing market, despite the low individual incomes.

The new report finds that teenage payment systems, such as prepaid plastic cards, are currently provided by only a handful of suppliers. While the sector is lucrative, Datamonitor says marketing and advertising to teenage consumers is likely to prove difficult and operators should look to tie-in with larger teenage-friendly brands.

The firm found that teenagers in the US and in seven EU countries last year spent $483 million on-line. It suggests that this figure will increase to $10.6 billion by 2005, fuelled by the development of new payment options specifically targeted at teenagers and general internet growth. Teenagers are among the most likely groups to pay on the internet. However, their inability to obtain credit cards and the comparatively small number of sites accepting payment by debit card has historically made on-line payment difficult.

Datamonitor argues that e-tailers must integrate new solutions if they want to target the teen market. It says that, although teens can make purchases indirectly using a parent's credit cards, the buying experience is not the same due to the loss of independence for the teenager.

Prepaid or stored value cards (with the former the money is stored in an account whereas the latter stores the money on the card, like an ePurse) allow teens to shop on the internet securely and without getting into debt. It is this type of product that is currently growing rapidly, both in use and the number of competitors in the market.

Datamonitor says that growth over the next five years is likely to be very different in the US compared to Europe. US teenagers in general have much more money at their disposal than their European counterparts. The dominance of the credit card in the US will allow products connected to parents' credit cards to flourish. However, Europe will see more independent solutions emerging, with products developed by independent companies such as Smartcreds and Splash Plastic, but also from banks.

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