American Express Co. chairman Harvey Golub, whose acerbic comments three years ago helped set off a legally troublesome chain of events for MasterCard and Visa, said Monday that changes in the bank-owned associations' membership policies are "inevitable."

"Either through action on the part of member banks or through the courts," Mr. Golub predicted, MasterCard and Visa will not be able to sustain rules that prohibit banks in the United States from offering other brands of credit cards.

American Express' chief executive officer spoke at the Credit Card Forum, sponsored by the trade publisher Faulkner & Gray. At the same event in 1996, Mr. Golub invited banks to consider comarketing arrangements with his company.

That would require overturning MasterCard and Visa bylaws, now one of the remedies sought by the Justice Department in an antitrust lawsuit.

Mr. Golub on Monday called Visa and MasterCard "Goliaths" imposing "illegal" rules on members. Overseas, he pointed out, 43 banks unaffected by such restrictions are working with American Express.

"Paying triple damages will get to be expensive," Mr. Golub said, referring to the ultimate antitrust penalty that MasterCard and Visa must figure into their legal strategies.

Speaking after Mr. Golub in Orlando, Visa International president and CEO Malcolm Williamson said he wanted to take "the high ground" and not comment on the lawsuit.

"If we are formally seen as the Goliath, I don't see the point in picking a fight with the Davids," he said.

The bank card groups were also a target of David W. Nelms, president and chief operating officer of Discover Financial Services.

During a speech in which he unveiled a new strategy for courting merchants, Mr. Nelms portrayed the Morgan Stanley Dean Witter & Co. unit as the "David" of the antitrust battle.

He predicted in a separate interview "that there will be a settlement, and for the most part I am surprised it has gone on this long."

Three years ago, Mr. Golub noted, it was only Visa that forbade members from issuing nonbank card brands. Soon after Mr. Golub made his solicitation to the banking industry, MasterCard passed a similar rule that Mr. Golub called "the biggest blunder in recent history."

"MasterCard's adoption of this restriction was not in the best interest of the association, and was hardly a stellar competitive tactic," he said.

Elaborating in an interview Monday, Mr. Golub said, "MasterCard has an incredible opportunity. They could come to us and say, 'We'll eliminate (the bylaw) if you give us an exclusive for five years.' They could pick up market share like you wouldn't believe."

Mr. Golub said Robert Selander, chief executive officer of MasterCard International, has never discussed this possibility with him. Mr. Selander was reportedly invited to speak at the Faulkner & Gray forum, but neither he nor any other senior MasterCard representative was on the program.

Mr. Golub said he is supervising American Express' Internet strategy, and has spent more time on that in the last year than anything else.

But he suggested several ways that U.S. banks could work with his company now without violating association rules. A bank could set up a cobranding relationship with American Express, he said, or sell part of its card portfolio to the New York-based company.

When the association bylaws are finally eliminated-Mr. Golub would not give a time frame-he said at least one of the several "megabanks" that have had discussions would work with his company, though the majority would be small and midsize institutions.

Mr. Golub said he made the speaking appearance to "correct some of the egregious errors" the card associations have spread, such as the accusation that American Express is out to steal banks' customers. Such a strategy would be "stupid" and not work for long, he said. Mr. Golub accused Visa and MasterCard of treating their banks like "franchisees."

"The interests of the banks diverge from the interests of the associations," he said in an interview.

Mr. Golub enumerated Visa's headaches: the federal lawsuit, another filed by major retailers and challenging debit card acceptance policies, and "in some cases being deserted by its members." The last was a reference to Citigroup executives' defection from the Visa board of directors to MasterCard.

Mr. Williamson of Visa said the matter of Citigroup and its desire to move the Visa brand to the back of the card has gotten "more sensational attention than it merits." But he acknowledged that "flexibility is crucial" for a bank card association, and "if member banks and our boards want more flexibility in where they put the brand, we will do all we can to provide it."

While Mr. Golub was courting banks in ways that made American Express sound like an association-banks might choose from a range of services that could include customer service and data mining-Mr. Nelms said Discover is making a concerted appeal to the merchant community, trying to capitalize on disgruntlement over Visa's and MasterCard's raising of the interchange rates that affect merchant processing costs.

Discover is sending a letter to more than three million merchants, telling them they are being "nickel and dimed" by Visa and MasterCard and pointing up Discover's lower prices. Letters will be followed up by personal visits from Discover representatives.

"Associations no longer view merchants as some of their primary customers," said Mr. Nelms, who joined Discover from MBNA Corp. six months ago. "Because they've lost touch with merchants, they've lost sight of the fact that cost matters to merchants."

For the first time, Discover is asking merchants to accept its brand exclusively and is offering financial incentives to do so, Mr. Nelms said. He said he expects his brand to gain acceptance parity with Visa and MasterCard in the United States within two years.

Discover has 46 million cardholders, Mr. Nelms said. "When we get to 100 million, some of the merchants could think of dropping Visa and MasterCard."

Mr. Williamson said Mr. Nelms "has a fair point about the interchange fees. We must be prepared to sit down and think very hard about this in the future."

Mr. Nelms said one reason he felt safe revealing Discover's new strategy was that the associations "will be resistant to lowering their fees."

Mr. Golub said he would "prefer for Visa and MasterCard to have lower interchange rates." He said bank card borrowers "support people who don't revolve" balances. Because most of American Express' cards do not permit holders to carry a balance, its retailer discounts rates are higher.

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