March 28, 2013, 2:05 PM

Oink, oink: Virtual Piggy focuses on children growing up with e-commerce

Fathead uses the payment processing tool to enable young shoppers to buy online.

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Kids these days. They’re texting the minute they leave the womb, blogging about their daily kindergarten tragedies, using their smartphones to check into afternoon play dates. OK, that may be hyperbole—just a bit—but there is one thing the generations that had to walk to school both ways uphill can’t deny: Consumers younger than 18 are growing up in an e-commerce world.

That’s the reasoning behind Fathead LLC’s deployment this month of a payment processing service from Virtual Piggy Inc. “For anyone under the age of 18, online purchasing has always been available,” says Fathead chief marketing officer Joanna Cline, pointing out that Amazon.com Inc. launched in 1995.

Fathead, No. 310 in the Internet Retailer Top 500 Guide, sells life-size wall graphics of sports stars, cartoon characters and other popular images. Fathead took in Internet Retailer-estimated sales of $39 million in 2011, up 8.6% from 2010.

The Virtual Piggy service enables parents to set parameters such as spending limits and what merchants children can buy from. The young consumers can then order online themselves, under the virtual eyes of the adults who pay the bills. Merchants set up an account with the service, and install an orange Virtual Piggy button on the checkout page, a “fairly straightforward integration,” says Cline.

Merchants then pay a per-order processing fee that Virtual Piggy says is based on transaction volume, and which is billed monthly. Cline declines to detail what percentage Fathead pays but says the rate is “similar to [that] charged for credit card processing.” Credit card issuers charge the merchant an average of 2% to 3% of the value of transactions, according to a report last year from the National Retail Federation, a retail industry trade group. The processing service complies with Payment Card Industry Data Security Standards—a set of rules created by payment card networks to protect cardholder data.

From a consumer point of view, here’s how Virtual Piggy works: A parent goes to VirtualPiggy.com to sign up for an account, which also means storing payment and shipping information. The parent sets up controls and profiles for his children who will shop. That enables one of his children to, for instance, go to Fathead and place an order via that orange button on the checkout page. To complete an order, the child shopper enters his Virtual Piggy user name and password; the processing service says children do not provide their e-mail or home mail addresses, or any credit card numbers. After the order is placed, the service checks that the purchase falls within the limits set up by the parents. “If the order falls outside those parameters, the order will not process and the child will receive an appropriate message when he or she attempts to checkout at Fathead.com,” Cline says.

Parents, via their Virtual Piggy accounts, can keep track of spending and change those limits. They can also perform other tasks such as letting relatives access their children’s wish lists on the site.

Cline says that because the e-retailer installed Virtual Piggy only weeks ago, it is “too soon to share much data” about any sales or traffic gains from the processing service. “But we have plans to jointly market Virtual Piggy over the coming months and believe that Virtual Piggy can revolutionize the way children shop and save,” she says.

Parents can learn what merchants accept Virtual Piggy by clicking the “Shop Here” link on the payment firm’s site. Virtual Piggy says it 80 merchants have signed up to use the service (though some have not yet integrated the tool onto their e-commerce sites). Those merchants include nutritional education provider Super Sprowtz LLC and plush toy seller Ty Inc.

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