Children are eager to shop online, but it is very hard for merchants to sell to children. Instead of preventing kids from shopping online, another option consists in building technological solutions that allows them to do so in a safe and secure way.
Interview with Dr. Jo Webber, cofounder and CEO of Virtual Piggy
Where does the idea of Virtual Piggy come from?
I have children and was worried about them being able to spend money online very easily. Behaviors have changed a lot now that we all have access to the Internet, but nothing has changed in the way we help kids manage money. A few years ago, children would receive a monthly stipend from their parents and spend it in cornerstones to buy small things. Today, they want to spend their money online as well, and nothing can prevent them from doing so: if their parents won’t allow them to make some purchases from the house computer, kids have other options - going to a friend’s house or the library. We wanted to help parents control this, and teach children how to better manage their money. And opportunities are huge with the explosion of e-commerce.
How would you qualify the way children shop online?
It is not optimal for children to shop online, as they have no mechanism to pay for online purchases; they have to try to get a credit card from a parent. Retailers often tell us that children fill shopping carts but then are unable to complete the transactions. More shopping carts are abandoned by people under 18 than any other age group. Even on websites where products are very targeted to the children, with the same branding as in stores (for instance sanrio.com), children can’t check out because of age requirements. This new generation is very computer-literate. They use it to socialize, study, research, play, so they expect to be able to spend online. That’s where the problem comes in. We need to make it safe for kids to be able to manage their financials and spend with parental control, online.
What solution did Virtual Piggy develop to let kids make online purchases ?
The law is very strict in the US: it is illegal to ask children under 13 an e-mail address or a postal address. Companies have to be very careful with this and even big companies such as Disney were fined millions of dollars for not respecting this law. On the contrary at Virtual Piggy we provide the only legal solution to my knowledge, because with a Virtual Piggy checkout the merchant never asks the kid for personal information. The shipping address, credit cards details and even his last name are all given by the parents when creating the kid’s account and not asked again. Children with a Virtual Piggy account have a personalized dashboard on which they can access their monthly allowance, check what they spent, and see how much they should save to buy a particular product. We believe it is important to increase their awareness on the topic from a young age.
What is the place of banks in this landscape?
Yes, we talked to banks hoping they would be interested but we were surprised to see that they aren’t. Actually, banks loose a lot of money with kid accounts and they were not willing to add additional costs to that. They could see kid accounts as a way to gain clients at a very young age, but they were not very willing to take the risk. So the ecosystem around our solution is quite small with not too many actors for the moment, but as I said a new and connected generation is coming and things are going to change.