New Cash Card Targets Credit-Less Online Shoppers

One of the great paradoxes of ecommerce has been the fact that children and teenagers, among those most interested in shopping online, are among the least likely to have the credit cards needed for online purchases.

A company called Internet Cash hopes to provide a purchasing vehicle for people without credit cards—or those who don't feel comfortable using them over the Web. That vehicle is the Internet Cash Card, which is similar to a pre-paid phone card. Only cash is required to purchase the card, which comes in denominations of $10, $20, $50 and $100, in the brick-and-mortar stores that sell them, and consumers can also purchase cards online for themselves and for others through the Internet Cash Web site (www.internetcash.com). Consumers pay no premium over the face value of the cards.

According to Jason Richelson, vice president of retail sales for Internet Cash, over 200 online stores currently accept Internet Cash or are in the process of installing the software, which has been available to merchants since March. Larger merchants, such as Amazon, are waiting to see how the distribution base grows before signing on, Richelson says. However, the merchants who do accept Internet Cash offer a wide variety of merchandise, from floral arrangements to paintball supplies, and through its agreement with TWEC.com (The Web's Entertainment Center), shoppers can buy almost any video or music product currently in print.

Although other alternatives to credit cards are becoming available, such as pre-paid Visa and MasterCard programs, Richelson believes Internet Cash has more to offer—not just to customers, but also to the merchants that accept it. "We guarantee payment—it's as good as cash," Richelson says. "No one can dispute a charge with us." Thus, he says, there are no issues with chargeback fees, as there are with other payment methods. This enables merchants to allow customers to make smaller purchases with Internet Cash—for as little as 50 cents—without having to pay a surcharge.

Since payments are processed through a proprietary network and processing system, and thus don't need to be processed by a bank, transactions are lightning-quick—"two seconds at most," Richelson claims. The merchant never sees the customer's PIN number (which is created by the customer online after obtaining an Internet Cash card). Instead, an approval code is sent back to the merchant's POS system through the Internet Cash proprietary network, which utilizes VeriFone technology for card approvals.

Ripe for rural areas: Approximately 120 brick-and-mortar stores in the United States now sell Internet Cash cards, and the company has contracted to get another 1,000 stores carrying them by September. Shortstop Convenience Stores, a 23-unit convenience store chain in New England, has carried the cards since June, and has found that the cards have sold especially well in rural areas. "It's easier for them to shop online than it is for them to come into the city," explains Shawn Bartlett, operations manager of Shortstop's parent company, Jolly Associates.

Bartlett says the big challenge for his stores in carrying Internet Cash cards has been getting a grip on exactly where their marketing should be targeted demographically. "It's very hard to know who your market is—you have teens and you have 70-year-olds. And lots of people buy them for gifts. A lot of it is educating the public."

Although Shortstop's card sales have been sporadic so far—a store can sell $300 worth of Internet Cash cards one day and almost none the next—Bartlett believes this will change significantly during the holiday season.