The Check Is in the E-Mail - Internet/Web/Online Service Information

Industry Standard, The, Feb, 2001 by Ted C. Fishman

Rowe says that for micropublishers, opening a PayPal account is far easier than dealing with a bank, especially since the service only requires an e-mail address, which can parrot the name of the publication. PayPal's statistics demonstrate this grassroots appeal: The service is adding 20,000 new individual users a day and 3,000 businesses. At this rate, the company claims, they're beating rival Billpoint 5 to 1. (Billpoint does not release customer data.)

PayPal may have a huge head start with folks like Rowe, but the established giants in the payments industry are coming up fast. First Data, which owns Western Union, has launched multiple initiatives in hopes of leveraging its position as the world's largest provider of credit card processing services. In the fall, Western Union rolled out MoneyZap, a plain-vanilla e-mail money-transfer program that lets recipients withdraw money from any of Western Union's 94,000 agents in 185 countries. MoneyZap could drive p-to-p overseas, especially in Europe, where Western Union offices are often attached to banks or post offices and have a more upscale presence than the urban check-cashing outlets and currency exchanges that are its most visible presence in the U.S.

But First Data's plans are much more ambitious: to sell MoneyZap's technology platform to other financial services institutions and merchants, who could then create private-label p-to-p systems of their own. The company's clout in credit card services makes it a mighty competitor out of the block: Its 343 million customers worldwide could one day open their Visa statements to find invitations to sign up for an FDIC-backed p-to-p service.

First Data is also the lead partner in the newly formed eOne Global, a $600 million startup conceived to develop and exploit new payment technologies for the online world. The other partners, Boston Consulting Group and Goldman Sachs among them, are a fearsome bunch of veterans in online financial services. "MoneyZap represents just the basic capability of e-mail money' predicts Scott J. Loftesness, managing director of eOne Global. "In two or three years, we can take the [direct-payment] platform and market it across broadband and have the ability to create an unbranded system - something like the Cirrus or Star ATM networks, where any account can be used with any other." Other strong players vying for attention in the online-payments field include AOL (AOLQuickcash), Citibank (C2it), Bank One (eMoney) and Chase, all of which have either rolled out their first products or announced programs in the works.

The competition is tough because the stakes are so high. According to some estimates, the p-to-p market runs to some $700 billion per year. Auction sales make up a $19 billion piece of that, but other groups, such as mom-and-pop businesses, clubs and family members sending cash, could eventually dwarf the eBay set. The potential universe? Think of the number of people who pay for things with cash or checks today. In two to three years, you might stop by a yard sale or bake sale and find a seller manning a small terminal or laptop that will let you tap into your p-to-p account. PayPal is already porting its service to mobile phones, so account holders can use their phones as portable ATMs.