By Mitch Lipka
NEW YORK, Feb 1 (Reuters) - J.P. Pagoadacruz was sitting in a restaurant with friends one night when he realized he had forgotten his wallet. What might have been an embarrassment turned out to be no problem, though, because he had remembered to bring his phone. In a matter of seconds, he transferred money to a friend, using an app for a payment service called Venmo.
The 30-year-old office manager of a San Francisco hotel is part of a growing number of people who use a person-to-person payment system to transfer money directly from their bank accounts to those of friends and other individuals using mobile phones, computers and tablets.
Pagoadacruz uses the Venmo system about twice a week for splitting restaurant tabs or household bills, and says sending money this way is easier than constantly running to an automatic teller machine or writing a check.
"Just tap on their name, tap on the amount and send," he said.
Pagoadacruz's ease comes because the people he most often exchanges money with are all signed up with Venmo. If he were trying to send money to a new acquaintance outside the system, however, that person might balk at having to go through sign-up hoops.
Besides Venmo, an array of new services are ramping up to provide electronic payments between individuals. Others include clearXchange, an emerging partnership of Bank of America Corp , JPMorgan Chase & Co and Wells Fargo & Co ; Popmoney and Dwolla.
The oldest such company, eBay Inc's PayPal, mainly handles person-to-business payments, but the company is also making a stronger push in person-to-person transactions.
Such transactions are common in countries from Brazil to South Africa, but have so far been slow to catch on in the United States because of compatibility problems and security concerns.
In the past year, person-to-person bank transfers totaled an estimated $21.6 billion in the United States, Javelin Strategy & Research reports. But First Annapolis Consulting estimates that such payments could grow to an $80 billion to $120 billion market.
"It's one of the biggest growth markets - no matter what the economy does," said Wayne Steiger, a payment industry veteran and chief executive officer of FlowPay Corp, which connects donors to charities for contributions made in a fashion similar to person-to-person transactions.
When the system works smoothly, it makes daily life a little less cash-dependent. Popmoney says that one-quarter of all its transactions involve splitting rent payments. Other uses: sending money to children, giving gifts and paying for domestic services like babysitting.
Some systems also offer the ability to send out "reminders" to someone who owes you money. For instance, you can send a note to your roommates saying that they owe their share of the cable bill. If a roommate clicks "yes," the system transfers money out of his or her account.
While users worry about security, Tom Roberts, senior vice president of Popmoney parent Fiserv Inc, said his system is well-protected. "There's a whole series of things that are designed that if a fraudster gets a hold of something, we can take steps to prevent fraud."
Overall, the biggest problem is that the various services do not yet talk to each other very nicely. "When it comes to paying one another, in a whole variety of contexts, we're still sort of living with last century's technologies," Roberts said.
Removing the communication problems between systems is a job for the banks, but they have to have the will to tackle the problem, said Javelin payments research analyst Aleia Van Dyke.
FlowPay's Steiger and others watching the industry agree that what is needed is an alliance of the various platforms, similar to how the once-disconnected ATM networks became accessible to all.
The number of bank alliances signals that things could come together soon. The three-bank partnership behind clearXchange represents 37 percent of bank account holders in the United States. Although Chase is part of the program, that bank is just getting started. Spokeswoman Christine Holevas would not say when the system, which is currently in testing, will open to all the bank's customers.
Popmoney, which had just two participating financial institutions in September 2009, now is working with 1,700, including Citigroup Inc, Citizens Bancorp and PNC Bank.
"The good news is that U.S. banks have finally come to the conclusion that this is the future," said Steiger.