Kenneth I. Chenault, president and chief operating officer of American Express Co., said in court testimony Friday that his company wants to offer an offline debit product "that would be priced lower than Visa and MasterCard" but cannot do so because of the associations' rules.

Mr. Chenault said Amex is cut off from the offline debit business because U.S. banks are not willing to risk flouting MasterCard and Visa rules that prohibit working with nonbank brands. The banks fear they could lose access to the associations' ATM networks, Cirrus and Plus, he said.

In his second day as a witness for the Justice Department in the antitrust trial in New York, Mr. Chenault said American Express is unable to offer signature-based debit cards now and has no specific strategy or plan to introduce them.

Amex does issue online debit cards to its 30,000 Membership Banking customers, and those transactions run on regional electronic funds transfer networks, such as NYCE. But Mr. Chenault said his company would prefer to offer offline, signature-based debit cards to Membership Banking customers and others, including deposit customers at banks.

"I would like to give our customers a choice of debit products," Mr. Chenault said. MasterCard and Visa rules stand "in the way of us offering a viable debit product."

Adam Rothschild, vice president of strategic planning and business development for travel related services at Amex, testified Friday afternoon that the company had considered introducing a U.S. offline debit product in 1996 but concluded that it would be too expensive. The transactions would have had to run through the automated clearing house at a cost of 3.7 cents each.

Amex did bring offline debit products to market abroad: In 1998 it introduced cards in the Czech Republic, Australia, and Singapore.

In a sparring match with Visa attorney M. Laurence Popofsky on Thursday, Mr. Chenault found ways to make the point that if Visa truly cared about banks' best interests it would not stifle them with rules and regulations but would let them work with whomever they pleased. Mr. Chenault contended that Visa works primarily to support its own brand and the interests of larger banks.

"The association is focused on its own interest and not serving the interest of banks," he said.

To show how Visa helps its members compete with Amex, Mr. Popofsky cited American Express' highly profitable cobranding deal with Delta Airlines. When the deal was up for renewal, Visa threw its muscle behind a large member bank - the name was not disclosed - to help it win the Delta business away from American Express.

Harvey Golub, Amex's chief executive officer, had once pointed to this incident in a plea he made to banks to get them to work with Amex. Mr. Golub said that if he worked for a Visa member bank he would question the association's decision to invest so much money to support a single bank.

Mr. Popofsky said that if the Delta card had moved onto the Visa network it would have helped all Visa banks by raising the ubiquity of Visa's brand name.

Mr. Chenault parried: "I think the Visa name is a very, very, well-known name, and I don't see how them supporting a single bank can help 6,000 banks."

Both Mr. Popofsky and MasterCard lawyer James Egan sought to show that Amex has its own exclusionary rules. Under a merchant acceptance and cobranding deal between American Express and Costco, the retailer cannot accept any other card brands at its stores.

Mr. Chenault said the rule was made at Costco's request. Costco had previously had an exclusive agreement with Discover, Morgan Stanley Dean Witter & Co.'s card unit.

Mr. Egan pressed Mr. Chenault on this point, asking why brand exclusivity was necessary. Mr. Egan said the contract even states that MasterCard and Visa debit cards cannot be used at Costco stores and that Costco cannot post any acceptance marks for online debit. Mr. Chenault said he did not know the full details of the contract.

The trial is being heard by Judge Barbara S. Jones in U.S. District Court for the Southern District of New York.

Andrea Cooper contributed to this article.

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