Paying before you shop

Soon you won't need to use your credit card online at all

By BBC News Online internet reporter Mark Ward

Internet provider World Online is launching a scheme that lets consumers buy on the net using pre-paid cards.

It hopes the cards will take the fear out of shopping online and boost the numbers of people willing to buy via the web.

The company claims the card will be a big hit with those without credit cards such as teenagers or people deemed by banks to be a credit risk.

The idea of using pre-paid cards for shopping online follows closely that of pre-paid cards for mobile phone calls - a move widely attributed with firing the massive growth in mobile phone use.

Cash for cards

World Online is planning to introduce its pre-paid card system, called Jalda, in October. The card will be available in denominations of £5, £10 and £20.

Each Jalda card has a unique pin number concealed beneath a scratch-off panel. World Online says it expects its e-commerce partners to start letting customers pay for goods and services with the card towards the end of the year.

Instead of entering a credit or debit card number, users will simply type in the pin number of their Jalda card when purchasing goods online. World Online claims that the card will be a boon for the 50% of British people who do not own a credit card.

The Jalda cards will be available at high street newsagents, petrol stations and supermarkets.

World Online says it will also be possible for parents to use the card to limit how long their children spend on the internet every month by using it as an "on-switch" for net access.

World Online expects the card to boost the payment of small sums of money on the internet. While people are happy to spend small sums for a newspaper or magazine in the real world, few are happy, or able, to do the same online.

Micro money

Many websites do not let people use a credit card if they are spending less than £5.

But with a pre-paid card, consumers could spend very small sums to buy only the articles they are interested in from a newspaper or only the tracks on an album that they like.

"The whole micro-payment area between £0 and £10 is really badly served," said Simon Preston, chief executive of World Online UK. "We've come up with a payment system that's neat and easy to grasp."

He added that consumers would probably be happy to use a pre-paid card because so many people paid for mobile phone calls with them already. The technology was developed by EHPT, a Swedish company joint-owned by Ericsson and Hewlett Packard.

Buying habits

Details about a rival pre-paid system are sketchier. The Splash Plastic card is due to be launched next week but so far it is not releasing details of who will be offering it.

The US financial giant GE Capital is known to be backing the Splash Plastic scheme.

Pre-paid cards should be more secure than credit cards and as anonymous as cash. They may reassure those who worry about their credit card details being stolen when they shop online or are reluctant to reveal personal information about buying habits.