Person-to-person payments catching on with banks

You’re out for dinner with a friend and the bill arrives. But, oops, you’re short on cash and can’t pay up.

Instead of hitting the ATM or writing a paper check to repay that friend’s loan, there’s now another option: log online to your bank and send a virtual check. All that’s required is the recipient’s e-mail address or cell phone number, where they receive a text notification.

It’s known as a person-to-person — or P2P — payment, and a growing number of banks and credit unions are rolling out the service.

Sort of like PayPal for personal banking, it lets you send and receive cash electronically without having to disclose or swap financial information with the recipient, whether it’s the baby sitter or your best buddy.

At this point, most P2P payments still have to be made and retrieved from a computer, using online banking access. But some banks are working on P2P for the iPhone and other smart phones.

Here are some of the other online and mobile money tools now available to consumers:

• Deposits by phone: JPMorgan Chase & Co. recently offered its iPhone mobile banking users the ability to deposit checks by phone, using the built-in camera to photograph a check before transmittal. A similar option is available from USAA banks, which primarily serve military members and their families. • Account alerts: Many banks and credit card companies let you sign up for text or e-mail alerts when your debit card is running low or you’re close to exceeding your credit card limit.

• ATM/branch locators: Smart phones let you find the nearest cash machine or walk-in branch.

• Personal financial management: Often offered free as part of online banking, it’s a Quicken-type budgeting tool that lets consumers monitor their spending among various bank accounts.

The online banking options will likely hasten the continuing decline of paper checks for noncash payments.