January 09, 2001, 1:13 PM — The 800-pound gorilla has finally jumped into the online payments marketplace. Well, two 800-pound gorillas holding hands.
Up to now, X.com Corp.'s PayPal service has been the leading way for people to send money to one another via
e-mail. It's a useful service for online auction users, small online businesses and parents of college students.
But today, Citigroup Inc. announced its c2it service, which will also be heavily marketed as AOL Quick Cash to America Online Inc.'s 26 million-plus users.
Citigroup isn't the only bank to offer e-cash -- last spring, Chicago's Bank One Corp. launched eMoneyMail and San Francisco's Wells Fargo & Co. teamed up with San Jose-based eBay Inc. to launch BillPoint.
The way these services work is that a user signs up by giving either bank account or credit card information. The recipient gets an e-mail saying there's money waiting. He or she then signs up in turn and has the money transferred electronically, or requests a paper check.
PayPal has already signed up more than 4 million users.
C2it will be free to users for the first three months, then it will cost $2 per transaction. By comparison, PayPal is free to people who only use it occasionally -- though heavy users are asked to pay a fee, and Bank One charges $1 per eMoneyMail transaction.
The new service marks the start of a major push on the part of Citigroup into the online payments arena, said c2it chief operating officer Antony Jenkins.
"We believe that payments are the next category of financial services that are going to be transformed by the Internet," he said.
In the first quarter of next year, Citigroup will expand the service to include international payments and bills. Wireless will be added to the agenda for following year, said Jenkins.
In addition, c2it will be integrated with Citigroup's current online offerings, including aggregator site myCiti and Citibank online.
"It's really important that these services are positioned where the consumer wants to do financial business," Jenkins said.
