Kwedit gives kids credit, but should it?

In an increasingly digital world filled with virtual goods and online services, the teens of today aren't just being marketed to every time they sign into Facebook to play a virtual game; they need to buy stuff for their avatars or purchase digital goods.

But children they can't slide their allowance into the front of the family computer, which is where a new online payment service Kwedit comes in, as featured on "The Colbert Report" Tuesday night.

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Kwedit allows young teens and adults to, "Play Now. Pay Later" by giving teens the ability to make a promise to pay for something later, and enjoy the benefits now. It gives teens a solution for making online purchases without a credit card by allowing them to pay their promises off by visiting a 7-Eleven, mailing in cash or "Passing the Duck" to a family member for payment.

As people use Kwedit, and pay it off, they can increase their available Kwedit and establish a better "Kwedit Score" which allows them to make bigger promises in the future; just like a credit card.

"Kwedit Promise is not for children," Loree Hirschman, Kwedit VP Marketing clarified in an email to WalletPop, "It is a service for teens and adults, 13 and up."

Rather than offering a credit card like service to tweens, Kwedit see itself offering people the ability to make small online purchases without the need for a credit or debit card, whether that is due to lack of access, budgeting or privacy concerns. The spokesperson also pointed out that the company does not charge interest or allow users to run up a large balance, instead limiting them to small transactions that are used to purchase digital goods.

On top of enabling purchases without a credit card, the service does provide parents with the ability to teach kids about money, including the perils of not paying your credit cards (something many college seniors still don't understand) and discuss financial responsibility.

I'm all for more financial literacy, and these days credit is a part of that. Even if you pay your credit card off every month and never pay any interest fees you're still using credit and it's highly likely that your child will, at some point in his or her life, have to use credit too. Teaching them how to do it responsibly is an important conversation that may be made easier with Kwedit.

That said, not everyone is a fan of extending Kwedit to youngsters, including Stephen Colbert, who featured Kwedit in his "The Word" segment Tuesday night where he expressed his disdain for giving kids the ability to, "spend money they don't have, on things that don't exist."

Perhaps we can find a middle ground with my new product, Dwebit - a debit card for kids. You have my number Stephen.

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