Updated

Visa took on PayPal today in the personal payment space, announcing that consumers in the U.S. would be able to receive and send funds to any eligible Visa account.

Consumers will have the option to send personal payments from a bank to a Visa account by simply entering a recipient’s 16-digit Visa account, email address or mobile phone number. The process is comparable to how users would send payments on PayPal.

The new Visa personal payments service was made possible by technical improvements and a new Visa transaction type that allows banks to accept incoming funds. The first U.S. banks are expected to make the personal payments available by the second half of 2011.

According to Jim McCarthy, global head of products at Visa, “For fifty years, Visa has worked to simplify payments at the merchant point of sale; we are now evolving our network capability to make it easier for our account holders to pay one another.”

Although Visa will be competing against a strong incumbent in the personal payment space, if there is one company that can unseat Paypal, Visa, which already offers personal payments in more than 70 countries, is it.

Visa has been relentless in building its presence in the personal payment space, as evidenced by the company’s purchase of virtual goods monetization platform PlaySpan and e-payment company Cybersource. Visa plans to use CyberSource, which it purchased for $2 billion, to pursue new opportunities in Asia and Latin America. In 2010, the company also introduced a PayPal competitor in Australia called PayClick.

Competing with PayPal, however, will be no small task. At the end of last quarter, PayPal announced it had 94.4 million active registered accounts, and was adding approximately one million active accounts per month. The company’s total payment volume was $26.9 billion last quarter.

Update: Here’s PayPal’s statement in response to the news:

It’s clear that more companies are waking up to the power of digital money. As the leader in global online payments for the last twelve years, PayPal has unmatched advantages that we believe put us ahead of the competition. PayPal connects to 57 different financial networks and 15,000 local banks in 190 markets – not just in the Visa network, but with payment methods that meet our customers’ preferences in markets around the world.

Photo via Declan Jewell