Question: What do you get when you integrate wire transfers with email, then pay everyone $10 to try it?

Answer: Approximately 600,000 users in 100 days, PayPal and X.com’s combined user bases at the end of February. An impressive total, considering the rest of the Net-only bank industry numbers about 400,000.

Finally, a bonafide ebanking hit. PayPal is adding 10,000 new users per day and it hasn’t even advertised yet. X.com, despite a well-publicized fraud incident , is the largest Internet bank based on number of accounts, with more than 250,000 after just 90 days in business; and it too has yet to place its first banner ad. (Note: As we went to press, PayPal and X.com announced their merger, 3/2/00.)

Oh, but we repeat ourselves. This report is about Net-only banks, not new-fangled payment schemes. But you can’t separate the two: Internet banking is all about electronic payments, loans, and trust. (Hmm…sounds a lot like a credit card, doesn’t it?). Payments drive traffic. Loans are used to monetize the traffic. And trust provides the establishment a temporary edge over the Web-based, non-bank upstarts such as PayPal, eBalance and PayTrust.

The best Net banks score highly in only two of the three areas. The missing ingredient at most? Easy-to-use e-payments. But, as banks and platform vendors scramble to emulate the success of PayPal and X.com, it’s only a matter of months before you’ll be able to zip $20 across the Net from many (most?) leading banks. See our other year 2000 predictions for more on what’s on the horizon.