Internet Users Lend and Borrow Money Among Themselves

The Prosper.com a startup that wants to become the eBay of loans. Excerpt:

Prosper's users lend money to and borrow money from other people on the site at what the company says are better interest rates than those available through traditional financial institutions and without some of the risk that comes from typical person-to-person loans.

"We looked at eBay and said, 'Why can't we do this for money?' " said Chris Larsen, Prosper's chief executive.

He noted that consumers make, at most, about 4 percent on their savings accounts, which banks then lend to credit card customers at 14 percent or more.

"That's just a huge spread," Mr. Larsen said. "We think if you allow people to participate directly, it's a more efficient marketplace. People can make a better return on their deposits, which then become the source of credit to others."

On the Web, everything gets spread out to the edges, including banking. (Last summer, B2.0 covered a UK startup called Zopa doing the same thing.)