Virtual Piggy has two major challenges as mobile commerce expands. The youth-focused alternative payments provider has to tackle the generation gap between its users and the parents that supervise transactions, and it must maintain consistency between digital channels.

To help with the juggling act, the company turned to Iain Herd, PayPal's former head of mobile partnerships, who recently joined Virtual Piggy to direct and manage the company's mobile strategy.

"If you talk about electronic commerce and mobile commerce, those two worlds are coming together, and most merchants are now talking about providing an omni-channel experience," Herd says.

Omni-channel refers to the intersection of mobile, Web and brick-and-mortar shopping. At Virtual Piggy, major step in managing omni-channel payments will be to up its game in mobile. Virtual Piggy is not optimized for mobile, and changing that is a top priority, Herd says.

"For Virtual Piggy, the users are 8 to 21 years of age. They are engaging mobile first, while their parents or grandparents may be using another channel," Herd says. "[In the future] kids don't have the option of a swipe card or [contactless] payments. So mobile is really a good spot for us to be in."

It's also a necessary spot. Mobile is the primary focus of many new commerce initiatives, including mobile wallet developers, phone manufacturers and social networks, Herd says.  Mobile is also expanding as a primary channel for young people for non-financial purposes, he says.

"You see the trend towards mobile in larger internet use. Facebook, for example, is talking a lot about 'mobile first,'" Herd says.

Virtual Piggy allows young people to spend and manage money under their parents' supervision, using stored value accounts and profiles that parents set up for their children. Users select a Virtual Piggy icon at checkout and enter their ID and other details about the purchase. Virtual Piggy approves or denies the transaction based on conditions set by the parent.

Since young people favor mobile devices, the interface has to be easy to use and compelling—and that will drive the design and function, Herd says. Herd's professional experience—he helped launch the PayPal Wallet app for Windows, and also managed global social networking initiatives for Vodafone—illustrates how young people turn to the mobile channel well before the transaction stage.

"When we looked at who was shopping online via mobile, it was younger people who are doing that," Herd says.

Since parents also share in the account relationship, Virtual Piggy will ensure that the experience is not only consistent across channels, but also accommodates different comfort levels with technology that exist between young people and their parents.

"We'll actually have two mobile apps, one for the children and one for the parents," says Jo Webber, Virtual Piggy's CEO. 

As Virtual Piggy adds partners and expands its capabilities in mobile channels, it is also giving parents a way to monitor and control how young people are using mobile apps to shop and make purchases.

Beyond user experience, Virtual Piggy also faces a number of competitors that are also targeting the youth spending space, such as Pushcoin, which offers a mobile payment app for children.  SpendSmart, formerly BillMyParents, offers a youth-focused prepaid card with parental controls.

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