Courtesy of CashEdge CashEdge, a provider of money transfer technology to financial institutions, is trying to make interbank transfers easier with its latest service, which works as described above.

When I covered consumer banking at The Wall Street Journal five years ago, banks and their technology providers said the next big thing was online, person-to-person interbank transfers — allowing people to send money from their bank accounts to someone else’s account at another bank.

Yet five years later, barely any banks offer the service. In fact, technology providers are now saying this is the year that banks will finally offer the online service, even though the technology is not new.

CashEdge, a provider of money transfer technology to financial institutions, announced last week that it expected more than 100 financial institutions to start using its new person-to-person payment service by the end of the second quarter of this year. Currently, it said, three banks offer the service -– PNC, FNBO and First Hawaiian Bank. And it said additional banks would be introducing the service in the next few weeks, including Bank of the West, BECU credit union (established originally to serve Boeing employees) and Patelco credit union (set up initially for employees of Pacific Telephone & Telegraph Company).

Meanwhile, in the Bucks post “Money Transfers Between People Could Get Easier Soon” from November, I wrote about a similar service from the technology provider Fiserv available for banks that use its online bill pay system. Back in November, Fiserv expected the service would be available to bank customers as early as the first half of this year. A spokesman for Fiserv said this week that it has had a few financial institutions sign up for the service and it’s still on target for the first half of 2010, with an introduction planned for this summer.

But I still couldn’t help wondering if 2010 will really be the year for “P2P,” as such person-to-person transfers are called within the financial services industry. So I turned to industry watchers at the financial services research firm Javelin Strategy & Research to find out why it had taken so long for banks to adopt the transfer services and to get a sense for when they expected the services to catch on.

According to James Van Dyke, president and founder of Javelin Strategy & Research, the reasons for the slow adoption don’t include a lack of technology or a lack of consumer demand or willingness (just look at the popularity of PayPal).

Instead, he said, banks have been worried that interbank transfers may mean a loss of funds to other banks and may allow consumers to drain money quickly from their accounts in reaction to rumors about bank failure.

“You end up with a stalemate in the market where everyone is afraid to go first, thinking they’ll be penalized for it,” Mr. Van Dyke said. In fact, banks have also similarly just been tiptoeing into offering transfer services that allow people to send their own money to their own account at another bank, he said.

In addition, banks’ concerns about fraud have contributed to the slow introduction of such transfer services. In particular, the banks have worried that giving a customer the ability to easily make a transfer to someone else’s account at another bank could open up the pipelines for fraudsters. “There aren’t so many ways to get funds out, and with opening up more ways to get money out, there is more risk,” Mr. Van Dyke said.

Some banks did try to introduce some similar transfer services around the year 2000, including Citibank with its c2it service and Bank One with its eMoneyMail service, according to Javelin. But “two key factors -– inadequate risk management and a poor market readiness -– caused many of these initiatives to fail,” said Elizabeth Robertson, director of payments research at Javelin. She said, however, that those issues have been overcome since then and that the bank market is “in a much better place to now introduce these services with greater success.”

With Cash Edge’s new service, consumers don’t necessarily need to know the bank account number of the transfer recipient, which is required for some of the other bank transfer services on the market today. Instead, customers can send the transfer from their bank’s Web site to the e-mail address, mobile phone number or account number of the recipient. A recipient receiving the transfer via e-mail or phone would then be directed to the service’s Web site (PopMoney) to sign up to receive the transfer. Fiserv’s service would work similarly.

Sanjeev Dheer, CashEdge chief executive officer, said the new approach worked better than the older one because its network model was similar to how A.T.M.’s work and didn’t require that users go to each bank site to receive a transfer. Some banks currently offering the service are giving it away while others are charging $1 to $2 per transaction, he said.

Ms. Robertson, of Javelin, said she expected a number of banks to start transfer services this year, while Mr. Van Dyke said he expected at least the big banks to offer the service within a couple of years.

Have you noticed transfer services already available by certain financial services and if so, by whom? What have you used, or would you use, such interbank transfer services for?