Halfway through his $20 plate of rigatoni, your brother-in-law discovers he's short on cash. Again. Don't get mad; just bill him. Many companies are vying to be the one that eliminates your wallet, making it simple (and secure) to exchange money with anyone, anywhere, all through the Internet or wireless devices.

Already standard among eBay's auction hounds, online payment systems let users exchange real money electronically. Transactions are handled instantly, and nobody pays service fees to a middleman. Leading the pack is X.com. With 2.3 million users now and 5 million expected by year-end, X.com is accepted as payment in 40 percent of eBay auctions. Why? No checks, no credit card numbers, and no hassles. "When you get an e-mail from X.com that says you've been paid," says Vincent Sollito, an X.com spokesman, "you've been paid."

X.com previously dealt only in person-to-person transactions, but it rolled out person-to-business (P2B) services in June so consumers can pay e-tailers. P2B is nothing new to eCash Technologies; the financial industry has used its blind-signature-encryption technology, the eCash Card, for 10 years. With its partner Deutsche Bank, eCash has processed Web-based transactions in Germany since 1997 and is now raising funds to offer service in the United States. Unlike e-mail–based X.com, eCash works through its own secure software application called eCard, which provides single-click purchasing through partner merchant sites.

Internet payment systems base their claim to your future Web transactions on enhanced security features. Both eCash and X.com boast big-name encryption gurus in prominent advisory positions. "Credit card numbers weren't created for online transactions," says Drew Hyatt, eCash president. "They're open to fraud, and the merchants are feeling the fraud."

Hill of Beenz

Despite the apparent advantages of these services and others like them—including so-called e-currencies like Flooz.com and Beenz.com, which supplant real money with what are essentially online gift certificates—they're all suffering from a common setback. Practically nobody uses them.

"Payment schemes on the Internet are going to require consumer acceptance," says Jim Williamson, an IDC analyst, whose recent study found that 94 percent of Web purchasers use ATM, credit, and debit cards, while only 9 percent use alternate methods, of which Internet payment systems are only a fraction. "People use what they're comfortable with," he says, "and we haven't seen any evidence that this is going to change significantly." Even if online payment systems are more secure than credit cards, "the consumer views risk only from the perspective of their own liability. If your credit card information is stolen, it could become a significant headache, but it's not going to cost you any money."

Avivah Litan, GartnerGroup's electronic payment systems analyst, acknowledges the low numbers but takes a rosier view. Litan says, "In six months [X.com] lined up 1.8 million accounts, far more than any online bank or payment service has ever done. Even if a third of those are inactive, what they've discovered is viral marketing, incentives, a compelling application, and ease of use. When you do that, you have success."

It's a wave of the future no one seems to be riding, but have we all just arrived at the beach too early? Litan thinks so. "A year from now [Web payment systems] will have made a tremendous impact on how money moves over the Internet, eating more and more of that process and taking it away from the back-end payment processors." Until then, don't forget your wallet.