Digital cash. The phrase conjures up images of people beaming each other money through their handheld communicators, freedom from overstuffed wallets and the end of jangling coins. Very futurisitic and very far away.

Well, turns out digital cash is closer than you might think. In fact, it's here and being used by about several million people to transfer billions of dollars a year. Instead of beaming money, however, people are using e-mail. Yep, regular e-mail. These systems allow you to send someone money using just the recipient's e-mail address. No mother's maiden name, no social security number.

Here's how it works. You sign up for the service and then enter your banking information. Then you can send "money" using the system to other people's e-mail inbox. At the other end, the person gets the money credited to his or her bank account (of course, the recipient to sign up as well). So think of it as an online wire transfer, without the hassle of going down to the bank.

There are two major players in this category: PayPal and c2it by Citibank. A third, eBay's Billpoint, focuses primarily on auction payments and I will talk more about it in a future segment about online auctions.

I have tested and used both systems. They work pretty much the same way, though there are ways in which they differ. PayPal is focusing on payments to merchants, with 90 percent of its customers using the service to pay for items bought online, including online auctions. In those cases, the seller pays a fee, typically three percent of the purchase price, while the buyer is not charged. c2it does not charge for domestic transactions. This means you can send money, via e-mail, to anyone in the U.S., for free.

Things aren't as simple when you want to send money internationally. Basically, you use the convenience of e-mail, but the recipient receives money via a paper check or wire transfer. c2it, because it is backed by Citibank, places a lot more emphasis on international transactions and allows you to send money, for a flat $10 or $15 fee, to over 100 countries. PayPal currently works in 37 countries.

Both are as safe as online banking (which is pretty safe these days), mainly because they can track the movement of the money and can protect against unauthorized use. Just be sure to keep those passwords safe!

At a time when there is so much bad news about the doubt-com economy, some of you may be worried about the future of such services. Well, Citibank has certainly put its muscle behind c2it. And as for PayPal, it is about to have an IPO.

As with all new products that require a leap of faith, try these out with small amounts of money and then you can see for yourself. You just might get hooked.

RESOURCES:
PayPal.com
c2it.com
BillPoint.com

If you try these out, do write in to techguru@sree.net and let me know your thoughts.

 

See the Tech Guru School Site of the Month

o o o o o

To join the LOW-volume "Sree Tips" e-mail mailing list, send your name and e-mail address to sreetips-subscribe@yahoogroups.com. No more than once a month, you will receive an e-mail message with tips and tricks about new, useful and fun Web sites.