Plastic without the drastic

The launch this week of a plastic payment card specifically aimed at teenagers will cause more than a few parents to shudder at the idea of a "credit card for kids".

The card, called Splash Plastic, is targeting youngsters who want to buy goods on the internet and is designed "to give teens the independence to spend their own money online", says the company behind it.

However, parents can breathe a sigh of relief: Splash Plastic isn't actually a credit card. It's a pre-paid card that only allows you to spend what you've got, so you can't run up huge debts.

Mums and dads have a few months to prepare for the full-scale Splash Plastic assault - it is being piloted in November and will be officially launched in late January backed by a £2.5m advertising campaign. But kids are already being enticed to sign up now by logging on to the website (www.splashplastic.com). Those under 14 are requested to ask their parents to complete the online form for them.

Teenagers are arguably the most net-savvy section of the population and more than 80% say they are keen to buy CDs, computer games and books online, but up until now most of them have effectively been locked out of the e-shopping revolution because they are not allowed to have a credit card. Splash Plastic says its card gives teenagers the freedom to shop independently on the net.

"There are 6.7m teenagers in the UK spending £20bn a year. They want to spend their own money and don't want to ask to borrow a credit card or rely on their parents to top up on online 'e-wallet'," says the company's marketing director Briand Beausoleil. It is estimated that one in three teenagers could have a pre-paid card of this type within two years.

So how do the cards work, and who are Splash Plastic anyway? The cards look just like credit cards, even down to the magnetic stripe on the back, but there is no credit facility. You have to go into a participating shop, hand over your card and the money you wish to spend online, say, £10 of pocket money.

The shop assistant will key this into a special terminal which will credit it to their Splash Plastic account. The card is now automatically loaded with £10 of cash and the teenager can spend it online immediately at internet retailers subscribing to the scheme. You don't need a bank account.

Splash Plastic says it is working with the UK's leading payment system providers on developing a network of 60,000 high street top-up terminals. It has already signed a deal with PayPoint, which operates a system for payment of bills through newsagents, convenience stores, supermarkets and petrol stations, and is busily trying to sign up online retailers selling "appropriate" items such as books, CDs, computer games and clothing.

The system is described by the company as "safe, secure and convenient". Cardholders will have a password which they will have to quote when making purchases.

Splash Plastic was set up by a group of London Business School graduates. It has secured funding from venture capitalists including GE Equity (the investment arm of GE Capital, the UK's largest store card provider), Global Retail Partners, Arts Alliance and Sussex Place Investment Management, the London Business School's investment division.

So what do others think? The National Consumer Council says that because the card is pre-paid, teenagers can spend only the amount which parents have agreed to. But it adds that less well-off mums and dads are inevitably going to come under pressure from their offspring to take out a card or top it up.

Other card news

• RBS Advanta has launched the lowest-cost credit card in the UK - an introductory annual percentage rate (APR) of 2.9 for both purchases and balance transfers until June 1 2001. But after that, the standard rate of 17.9 will apply (16.9 for the platinum version of the card).

• After years of looking down its nose at the wave of low-cost, no-frills credit cards launched in the UK, Barclaycard is quietly test-marketing one of its own. Selected Barclays customers are being invited to sign up for Barclaycard Alpha, which has no annual fee, a standard rate of 14.9 APR on purchases and a 5.9 APR balance transfer rate.

• People's Bank and Virgin Mobile have joined forces so that anyone taking out a People's Bank platinum credit card can take advantage of an introductory rate of 4.9 APR for purchases and balance transfers, plus obtain £50 off Virgin Mobile's new Siemens M35i handset, which currently sells for £119.99.