Zopa is an eBay style auctioning site in which, rather than putting up tangible goods for sale, you lend money. The site was launched in mid March, and it's only open to residents of the UK for now, so I haven't gotten a chance to play around with it first hand, but from reading the "about" pages, this is how I think it works: If you want to lend money, you say how much money you've got to lend, how much risk you're willing to take, and what interest rate you want. Zopa lends your money out accordingly, and pays you back the full amount due when the borrowers pay back.

If you're a borrower, Zopa assigns you to a risk-category, and you can browse all the available loans with their various interest rates and other terms (perhaps how long you're allowed to borrow the money for). Zopa tacks on their middle-man fee in the interest fee you pay, so basically the Zopa makes money off of borrowers, not lenders.

Zopa is "secure" because if a borrower doesn't pay up, Zopa uses "exactly the same recovery processes that banks use". That statement is disconcerningly vague, but I suppose you can't expect much better than the "processes that banks use". Zopa is "authorized and regulated by Britain's Financial Services Authority", which I suppose means that the goverment says their legit or something. Not familiar with UK business law.

All in all, I think Zopa is a very neat idea, and I look forward to seeing a Canadian version soon. I'd probably drop $100 or so at first, to see how it goes, and if it looks like a safe investment. I like the fact that I can do this shit from home (as opposed to physically showing up at a bank), and that I can fully understand the process my money's going through.