Pre-paid cards aim to boost online sales

A new payment system for buying goods and services online for as little as a fraction of a penny was unveiled at the ECTS video games trade show in Olympia today.

ISP World Online today launched its Jalda card, which it claims will provide a shot in the arm for ecommerce. Jalda is a payment system co-developed by Ericsson and Hewlett Packard

The cards will be sold in retail and travel outlets in units of £5, £10 and £20, and be used to buy goods and services online even if they cost a nominal sum, for example, on a penny-per-click basis.

Jalda's developers said this gives the system an advantage over credit cards, which stores typically require a minimum purchase of £5 to cover costs.

Potential users must sign a contract with their ISP before using the system. Each pre-paid card contains a scratch off covered panel hiding a card-specific PIN that users must key into their PC to make a purchase.

However, despite the success similar pre-payment schemes have proven with mobile phones, some experts doubt that this alone will be enough to boost online shopping.

Martha Bennett, an ecommerce analyst at Giga Information Group, told vnunet.com: "Such cards depend on how easy to use and how secure they are, and they'll have to be very easy and secure to make much of an impact on ecommerce generally.

"I've seen many payment systems and none have really made an impact. World Online is an internet service provider - how many merchants are they going to be able to sign up? That's key for them. Their chances depend on how many merchants they can sign up to support it."

Simon Preston, UK chief executive at World Online, said: "We think we're attractive to merchants. They're looking for payment systems and we are freeware and suitable for micro-payments. We're targeting merchants with digital content initially. We'll make an announcement in early October about some very good distribution channels."

However, pre-paid cards have received only a cautious welcome from consumer groups. A spokeswoman for the National Consumer Council said: "Such cards are preferable to credit cards and these payments are on the right lines in terms of improving security for online shopping. However, we still have some concerns over teenagers being introduced to living off credit before they are 18."

Preston dismissed fears that marketing credit to teenagers is unethical. "We're talking about £5 to £20, not bankrupting parents through credit card bills. It's good for the internet, empowers teenagers and I don't think there is any negative moral value," he said.