Remittance Wars

Last December, Internet portal Yahoo! and banking giant HSBC launched a Web site that allows people working in the United States to send money to family and friends living abroad directly from their computer. At paydirect.yahoo.com, users either send friends and relatives an automatic teller machine card with money on it, or they earmark cash to be picked up at one of 60,000 "MoneyGram" locations in more than 155 countries.

Currently, only a small fraction of overseas money transfers are sent via the Internet. Nonetheless, Yahoo! believes it will soon become dominant in the $50 billion United States remittance market, which is predicted to grow by 25 percent this year. (Yahoo! declined to comment on PayDirect’s performance.)

Competitors welcome the new blood. "Yahoo!’s a great company, but it’s a media property, and remittance is a very different market," says Kevin Hartz, CEO of Xoom.com, Yahoo!’s main online money-transfer rival. A spokesman for remittance giant Western Union was more direct, saying, "We welcome the competition."