By Mark Merkow
Visa Buxx is a parent controlled, re-loadable payment card intended for teenagers, using an associated Visa credit or debit card. The Buxx (pronounced bucks) Card uses a bank-hosted value storage mechanism (as opposed to SmartCard chip-based storage), similar to the gift cards that merchants are increasingly adopting. One major difference with a Buxx Card is that it''s accepted anywhere the Visa Logo is displayed, including online merchants who accept Visa, and ATMs.
The Buxx card looks and works like any traditional magnetic stripe Visa card and has the teen''s name embossed on the front. Parents can load the card with whatever value they choose and the balance can never be exceeded (like a debit card account). Additional value may be added to the card via the Web site or via a toll-free number. Parents can track their teen''s spending using the Web as well, and be given the option of removing value from the care should they deem it necessary.
Buxx is being touted as a way to help parents provide spending money for their teen and to teach practical money management skills. "Managing personal finances is a necessity for today''s'' teens who spend $153 billion a year -- mainly with cash. We''ve developed a safer, more convenient tool for teens to spend responsibly while providing an effective way for parents to control that spending and teach the benefits of money management" says Jeff Kann, Executive VP of Visa USA. Buxx is currently available through three Visa issuer banks: US Bank, Bank of America, and Capital One.
How Visa Buxx Works
Parents can apply online for the Buxx Card on the new Web site www.visabuxx.com. Eventually, paper-based applications from the bank will also be available, and through direct-mail campaigns. When applying, parents and teens are encouraged to take a financial skills assessment test to determine the teen''s financial literacy and to encourage dialogue about money management and financial responsibility. Other educational materials about financial matters are also available on the Visa Buxx Web site.
Once approved, a Welcome Kit is mailed to the parent''s billing address. When the card is funded, teen spending can be tracked and values adjusted as desired. Authorized gift-givers can also add value to the cards as desired. In the event a card is lost or stolen -- and reported as such -- the issuing bank will replace the value of it on a new card with the remaining funds in the dedicated account.
Fees, Costs, etc.
There are no additional fees or costs for merchants to accept Buxx cards since they''re treated like any other form of Visa cards. Consumers are not charged any fees to apply for or use the Buxx card.
Overall
Visa Buxx is an excellent choice as an alternative to cash, helping to convert an army of shoppers into buyers without the need for parental consent or intervention.
Pros: Visa Buxx helps online merchants to finally capture a portion of the exploding consumerism from today''s teens and can help merchants to effectively market their products to the 14-17 year old market. Buxx adds flexibility for teens that was formerly lacking without begging for their parents'' credit card for online shopping. Parents gain awareness of their teenager''s spending habits, and can potentially catch spending problems early enough before they get out of hand.
Cons: While Buxx adds no new technical or operational problems to online buying, it does bring some new social problems into the mix. Without the presence of physical cash, teen may have a more difficult time grasping concepts like opportunity costs or budgeting since they''ll never actually ''see'' money flying out of their hands. Because of non-stop advertising, teens may be encouraged to overspend simply because they can.
Another sticky issue is with today''s methods of verifying someone''s age on the Internet. The model used by the Age Verification Services (AVSs), where people who hold credit cards in their name are deemed over 18 because of banking regulations, is suddenly broken. The risk here is that access to unseemly sites that use AVS based on a loose association of credit card and age can no longer be trusted, and new model must be found to verify the age of anonymous Web surfers (do I hear an argument for strong user authentication out there?)
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