Bank One, the fourth-largest U.S. bank holding company with assets of $256 billion, entered the emerging field Wednesday, formally announcing its eMoneyMail service.

The Chicago-based company hopes to get the jump on other financial institutions in an area it says has huge potential — not only for person-to-person payments but for companies sending rebates or refunds to their customers.

"(E-mail payment) is the coming thing," said Robert Sterling, financial services analyst for New York-based Jupiter Communications. "It's important to get in on the ground floor."

Bank One is entering a field dominated since its inception late last year by X.com Corp. and PayPal.com, which X.com is in the process of acquiring. The combined company, still called X.com, has made its mark helping buyers and sellers on sites such as eBay more easily complete their transactions.

While many companies — and even the U.S. government — wire money back and forth on a regular basis, person-to-person electronic transactions are much more rare. Under eMoneyMail.com, anyone in the United States with a checking account or a Visa card can send or receive up to $500 in cash at a time.

Here's how it works:

The sender goes to www.emoneymail.com and chooses whether to pay by Visa credit card, Visa debit card or checking account. He then specifies an e-mail address for the receiver and the amount to be sent.

The receiver gets an e-mail message that money has been sent, clicks on an attachment with a link to the eMoneyMail site and indicates which of four possible ways she wants to be paid — the three cited above or paper check sent by surface mail.

The sender pays a $1 fee for each transaction; the receiver pays $1 only if a check is requested.

The money would become available the next business day at the earliest, Bank One officials said. But they said research indicates consumers won't use it mainly to get cash, instead using it as a secure, convenient way to make payments to others.

While X.com's service is similar, Bank One claims that its name as well as its 128-bit encryption — the highest commercially available Internet security standard — provide an extra measure of security and confidence that should help attract customers.

The founder and chairman of Palo Alto, Calif.-based X.com, Elon Musk, said his company is already entrenched enough to fend off Bank One's challenge. He said 128-bit encryption doesn't make a meaningful difference in security and most browsers don't even work with 128-bit encryption.

Besides, he noted, X.com charges no fee.