E-mailing money: HIT SEND TO SPEND

Service: Web sites, some for a fee, let you pay or be paid.

March 21, 2002|By Phillip Robinson | Phillip Robinson,KNIGHT RIDDER/TRIBUNE

You can e-mail words, numbers, pictures, programs, songs and videos.

Now you can also e-mail money.

I don't mean that you can scan a buck, attach that scan to an e-mail, and have its recipient print and spend the buck.

It's actually easier than that, and doesn't require you to own extra hardware. You simply sign up with one of the money-sending service Web sites, tell them your credit card or bank account number, then e-mail anyone on the Internet any amount that your card or bank can cover. The person receiving your e-mail then needs to sign up with the same sending service; it's free to join - for you, for them, for anyone. The money you sent shows up in the person's account at that service. Officially this happens the "same day," though generally it happens a lot faster. They can then direct it to their credit card or bank account.

No, there's no way to do this if you deal only in cash and they deal only in cash. Maybe someday you'll be able to feed bills into a machine like an ATM or change-maker and direct that money to an e-mail address. For now, the cash-carriers among us are stuck with using an older money-wiring service such as Western Union.

So, for those with cards and bank accounts, is e-mailing money entirely free? Well, no. You can join the services for free, but they charge a fee - a percentage of your sent money - on some transactions.

Perhaps more important - given the reportedly growing frequency of online fraud - is it safe?

(I was hit by fraud in November, when someone in Australia got not just one of my credit card numbers, but also the address that went with it, and charged more than $100 in online software and services. It has taken me three months, lots of calls, and a few letters, an affidavit, and a new credit card number to sort that one out. Am I scared? Not any more than I used to be, because 10 years ago I was hit for nearly $5,000 in fake credit card charges, done entirely the old-fashioned way: mail and telephone, no Internet.)

I don't have statistics on e-mail-money safety, but I can tell you the only trouble I've had so far with the services was a shutdown of one of my accounts for safety's sake. Basically, I trust these services just as much as I trust any other online site that I give my credit card number to. That is, I trust them enough to sign up with them and use them, though I watch my credit card bills carefully, and I still use my credit cards directly when I can. That's because - and this is important - the e-mailed-money services don't legally have to provide the same protection to you that the credit cards themselves provide.

To quote one of the legal fine points: "You acknowledge that once money is picked up by a recipient it is non-reversible and non-refundable." Credit cards have been around long enough for Congress to regulate some safety into their operations. In other words, if you don't get what you bought, you can get the card company to cancel the charges to your account.

E-mailed money is newer and "free" of regulation. That means you're on your own. If your recipient doesn't send the goods, or if you accidentally e-mailed money to the wrong address, tough. You're the one who loses.

The two big names in e-mailed money are PayPal and c2it.

PayPal.com claims many more users - 14 million. It's become popular as a way to pay for items at auction sites such as eBay. And it has lots of features - such as subscriptions (recurring billing) and a shopping card (for buying more than one item at a time) - that appeal to small businesses.

Want to sell something online but don't want to or can't go through the paperwork to get a Visa or MasterCard merchant account? Sign up for free with PayPal, copy the HTML code they provide onto your Web page, and immediately you can take payments from anyone online with a PayPal account. You'll be nicked for something like 2.2 percent plus 30 cents on each transaction. That's in the range that Visa or MasterCard would charge. On $100, that's $2.50. Those charges on small deals can add up to be significant.

PayPal also offers interest on money you keep with them online, though you should keep in mind that PayPal isn't a bank - this money isn't FDIC-insured.

PayPal was the service that froze one of my accounts. I set up several accounts so I could test - sending money from myself to myself - and that triggered their fraud radar. System crackers like to set up dummy accounts, apparently. I was angry at first that this account I hadn't even started using was frozen, and that I couldn't just kill the account - I had to provide faxed bank statements and ID first.

A talk with PayPal's helpful tech support got me nowhere, because it was just "policy." Corporate HQ explained the cracker trouble to me, and now I'm pleased that the fraud protection went into overdrive so easily.

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