Pay It Forward

By ADAM COHEN

I'm in the middle of writing a book and have been conducting a lot of interviews. A few weeks ago, I decided to get efficient and hire a friend of a friend who lives in Chicago to transcribe the tapes that have been piling up. With a few e-mails, we quickly agreed on a price and a work schedule. In his last e-mail, my new assistant had a novel request. Would I mind paying him through PayPal?

It was the second time in a week I had been steered to PayPal. A few days earlier, I won an auction on eBay, and the seller's listing said he accepted payment through PayPal and Billpoint. I knew these were the two leaders in the online-payment field, with millions of registered users between them, but I had never used either one. I decided to give PayPal a try.

My usual bill-paying routine leaves--let's face it--room for improvement. I start by writing a check, a process that really begins with trying to find a check. I riffle through desk drawers looking for an envelope. Then I hunt for a stamp with the proper first-class postage. (Jeez! Hard to believe that dog-eared 29[cents] stamp hasn't been good for nine years.) And then, like everyone else, I wait for the U.S. Postal Service to brave snow, rain, heat and gloom of night to deliver my letter--days later.

Things were a lot different with PayPal. I went to its website www.x.com) filled out a short registration form and entered my credit-card number. Then I typed in the e-mail address of the person I wanted to receive the money and the amount I wished to send. A few mouse clicks later, my $65.10 winning bid was hurtling through cyberspace to a seller in Florida, who got an e-mail telling him my money was waiting for him.

The cost, for me, couldn't be better. PayPal and Billpoint are free to payers, and Billpoint is currently running a promotion that takes $1 off all purchases made with a Visa card. PayPal actually pays you $5 to open an account and another $5 for each friend you refer. Both services make their money by charging the seller a small fixed fee and a percentage of the total dollar amount sent on each transaction.

PayPal and Billpoint are a great way to make payments to individuals and small businesses. But the "killer app" right now seems to be auctions. PayPal is used in an estimated one-fourth of all eBay auctions. And Billpoint, which is partly owned by eBay and seamlessly integrated into its payment system, is used for many more. PayPal's website includes a handy list of ways you might want to use the service, from sending money to kids away at college to "collecting payments from co-workers for office pools." (Wait, aren't there laws about that?) But the truth is, online payments are so quick and easy, you'll have no problem thinking of your own ways to use them.

The next frontier? Wireless. Palm Pilot users can already use PayPal and their units' infrared technology to "beam" each other cash. And with Web-enabled cell phones, PayPal can be used to make payments remotely. That means in the future, when you go shopping or eat out, instead of reaching for your wallet, you may reach for your cell phone--and an online-payment service. Ultimately, it may be your cash--as much as your frantic hunts for first-class postage--that PayPal and Billpoint render obsolete.

For more on online payments, visit time.com/personal Send e-mail to Adam at Letters@time.com att: Adam Cohen