Until six months ago there was no easy way for consumers to send one another money through the Internet, but now a swarm of small companies and at least three major banks are offering such services and experts are predicting rapid growth for them.

So-called person-to-person e-payments - the consumer counterpart to the rapidly expanding business-to-business market - grew out of the popularity of auction Web sites like eBay.com. Buyers and sellers wanted a more convenient way than checks and money orders to ensure payment from people they didn't know. Once eBay and others set up systems to facilitate this, other uses seemed natural: sending money to a son or daughter at college, or repaying a friend who'd picked up a lunch tab.

Most companies in the consumer sector are small, private ones and some have struck deals with big banks. Wells Fargo & Co., Bank One Corp., and FleetBoston Financial Corp. are the three that have entered the fray so far, and analysts say other banks would be wise to get in soon.

"This market has emerged out of nowhere," said James Van Dyke, an analyst with Jupiter Communications.

Wells Fargo has invested in a joint venture with eBay called Billpoint, which facilitates person-to-person payments on the auction site. FleetBoston announced a similar service in partnership with Providence, R.I.-based Tradesafe.com, which works with auction sites to let sellers accept credit card payments from buyers. In March, Bank One introduced a proprietary system called eMoneyMail that garnered 10,000 customers and made 4,000 payments in its first month. And Bank One said it has done little marketing for eMoneyMail, which lets users pay more than one person at a time.

The gorilla in this market, however, is X.com Corp. of Palo Alto, Calif., which recently merged with PayPal.com of Palo Alto. X.com offers person-to-person money transfer, bill payment, and brokerage and deposit accounts through partner institutions. It has reached an agreement to buy First Western National Bank of La Jara, Colo., its current partner in online banking. Under the deal, X.com would get its own national bank charter.

"If X.com doesn't scare me as a bank, then I'm asleep at the wheel," Mr. Van Dyke said.

Avivah Litan, an analyst at GartnerGroup Inc. of Stamford, Conn., said, "X.com is threatening to banks because they have bill payment control and business as well as consumer relationships - they are becoming the bank."

X.com was established in March 1999 but did not start offering person-to-person money transfer right away. PayPal.com, which was founded specifically to facilitate person-to-person payments, was established in November 1999.

According to Online Banking Report in Seattle, X.com was the most heavily trafficked Web site in February, getting 1.8 million visits and 10,000 new users a day.

X.com and PayPal merged as equals on March 2 and are integrating e-mail payment services with consumer and business financial services, said X.com spokesman Vincent Sollitto. The idea is that, as customers get accustomed to using the e-mail payments they may be receptive to fuller relationships, he said.

Since the basic payment service is free to both sender and recipient, X.com is generating revenue from interest earned on the float. The company also gets fees from the banking and investment products.

When PayPal and X.com are fully integrated, customers will be able to choose from service levels ranging from basic online personal payments to interest-bearing checking accounts and brokerage accounts. About 70% of the company's 1.1 million customers use only the payment services; the rest have deposit accounts through X.com, Mr. Sollitto said.

"X.com will be a threat to traditional banks' market share," said Jim Bruene, editor of Online Banking Report. "X.com can use its large number of eyeballs and mind-share to cross-sell other banking products."

Getting a bank charter would "give X.com credibility, and the feeling that your money is being watched by regulatory oversight." Mr. Bruene said.

X.com has won most of its customers through "viral marketing," in which customers are given incentives to tell others about the service. Mr. Sollitto the referral reward initially was $10 and is now $5.

"PayPal and X.com have instantly succeeded because they understand viral marketing, a simple technique banks still don't understand," Ms. Litan said.

In the meantime, others are hopping into the space.

PayMyBills.com, founded last May, said this month that it will buy PayMe.com, a one-year-old person-to-person payment company. The deal is expected to close next month; then PayMyBills will expand its service to let consumers request and accept payments from friends, family, and colleagues. Both companies are backed by Idealab, an Internet incubator in Pasadena, Calif.

According to Online Banking Report, PayMe.com has handled only 800 auctions on eBay against 840,000 for X.com's PayPal.

"PayPal still has the magic enrollment" - viral marketing on eBay, Ms. Litan said. But the auction site has just integrated the Wells Fargo Billpoint service, which means people can now search the site for auctions that accept Billpoint.

Ecount has emerged as a contrarian. Instead of competing with banks, "We think partnerships with banks is the way to go," said Matt Gillin, co-founder of the Philadelphia company.

Mr. Gillin said Ecount has a financial relationship with a large bank - he would not name it - that provides merchant processing and other back-end operations for credit cards. Ecount's strategy is to offer a cobranded credit card with at least three other banks.

To help win alliances with banks, Ecount added James McCormick, founder and president of First Manhattan Consulting Group, to its board of directors. Mr. McCormick, a prominent banking industry consultant, joined the board April 20 along with Peter Lund, former chief executive officer of CBS. Mr. McCormick "has relationships with top financial institutions, and Mr. Lund brings expertise on how to promote the product to consumers," Mr. Gillin said.

Ecount has also hired executives from American Express Co. and MBNA Corp.

Ecount entered the person-to-person payments market last week, when it changed its name from C/Base. Previously it offered gift certificates and drew about 250,000 customers who are now are being offered the Ecount product, a prepaid account that lets them make purchases at Web retailers and exchange funds with other Ecount customers.

The new Ecount system has enrolled 8,000. The company says its typical customer keeps $50 in the account and reloads it using either a credit card or a deposit account. Each Ecount customer is assigned a 16-digit MasterCard debit account number; customers are also sent a real card that they may use for offline transactions.

The ability to make purchases at merchants that accept the MasterCard brand, Mr. Gillin said, distinguishes Ecount from its competitors, which are focused on the auction sites.

But Mr. Van Dyke remarked, "If you didn't have Internet auctions, you wouldn't have p-to-p."

Bank One's EMoneyMail and Ecount are using the same selling point: that consumers can use their products instead of personal checks.

"Ecount gives banks a bootstrap capability that would be difficult to build on their own," Mr. Van Dyke said.

Banks need to respond to this market, industry experts say. They "are not paying attention to a big hit from left field," Ms. Litan said.

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