Online-payment facilitator PayPal Inc. has filed for an $80.5 million initial public offering. The move might seem cocky, but PayPal raised $90 million in venture capital six months ago, and it has taken away online payments as a meaningful revenue source for the big banks that it counts among its competitors.

"A lot of players in the financial industry, banks and credit-card companies, are very concerned with PayPal," says Celent Communications analyst Gwenn Bezard. He estimates that neither of its main competitors, Citibank or Wells Fargo & Co., has more than 100,000 customers who make payments via E-mail. PayPal has 10 million customers--20% of which are small businesses--giving it 90% of the market, Bezard says. "Most banks today are cutting costs rather than investing in E-mail-payment ventures. It's a growing market, but still a niche market."

According to documents it filed with the Securities and Exchange Commission, PayPal will use proceeds of the IPO to fund international expansion, product development, and general corporate activity. Bezard says the company also needs to fortify its security measures. The filings state that the company lost $169.5 million in 2000 on revenue of $14.5 million. For the three months ended June 30, its total payment volume reached $746.9 million, according to the documents. The expected share prices and number of shares to be sold haven't been disclosed.