WePay Inc. has introduced an online person-to-person payment service that enables groups and individuals to collect, manage and spend money.

The Palo Alto, Calif., start-up said its service will compete with eBay Inc.'s PayPal Inc. unit by making it simpler to collect money from groups of consumers.

"We wanted the product to be more consumer-to-consumer focused because most big payment companies solely focus on consumer-to-merchant relationships," said WePay co-founder Rich Aberman.

With WePay, people can collect money for rent, membership dues or vacation packages from roommates, friends or membership-based organizations, Aberman said. WePay users can create accounts at its partner bank, Bancorp Bank, a subsidiary of Bancorp Inc. in Wilmington, Del. The funds are insured by the Federal Deposit Insurance Corp. The service was launched March 31.

Account holders can also "share" their account details with other groups or organization members so people can verify where their money is going, Aberman said.

Group members can track their funds by looking up the account's transaction history and balance, Aberman said. However, only the account creator can make or receive payments.

To receive money from group members, the account creator sends an electronic bill. The recipient can send funds from a bank account or by charging a credit card; people need not set up WePay accounts to make a payment.

Account holders can spend money or make payments using a WePay Visa prepaid card, checks or electronic transfers. WePay began offering the WePay Visa card April 8. Early users include fraternities and other membership-type groups.

The main difference between WePay and other online payment service providers, such as PayPal, is that WePay account holders may create separate accounts for different purposes, Aberman said. This makes it easier for account holders to manage different pools of money without mixing personal accounts with business finances.

The service is free for individuals, but WePay charges groups a fee to receive payments, starting at 50 cents per transaction.

Observers have mixed feelings about WePay's chances.

Because WePay essentially is starting from scratch, it will need "smart people and good clients," said Red Gillen, a senior analyst at Celent LLC. "PayPal was able to succeed because they were in the eBay ecosystem, and no one has been able to beat them."

Nick Holland, a senior analyst at Aite Group, agreed. The online payment services "landscape is extremely competitive," he said. Moreover, if a company is "too small and has no connections, then how will they stay in business?" Mainly, it boils down to how the company can gain scale; it will need both "ubiquity and mass adoption," he said.

However, WePay's limited focus on group payments could give it an edge, said Andy Schmidt, a research director for global payments at Tower Group.

"Really, it is part PayPal for groups and part Virgin Money for groups," Schmidt said. However, WePay poses little threat to PayPal, and its main challenge is "outlining how it can add value to the marketplace," he said.