A flare-up of political tensions is threatening the edgy calm in relations between the big and small member banks of the MasterCard and Visa associations.

The largest of them, bulked up through marketing and mergers and making high-stakes strategic bets of nationwide and global proportion, are flexing their muscles as never before. There are rumblings of radical change. The associations' inner workings and outward images may never be the same.

The issues and tensions have been festering for years but rarely broke out into open warfare. They might revolve around the allocation of the considerable sums of money that members are assessed, or around the considerable strengths of the credit card brands and how they relate to banks' historically more constrained identities.

Now there is a financial conglomerate-Citigroup-playing in the same big, international branding league. The New York-based company, which wants to create an image as powerful as Coca-Cola, has fired a shot across Visa's bow.

Citigroup co-chairman John Reed, at a Visa U.S.A. board meeting two weeks ago in Chicago, made a stark proposal: that banks be permitted to move the Visa logo to the back of credit and debit cards.

No action was taken. That is the only official word put out by Visa, which veils such events in secrecy. Industry sources-including at least one eyewitness-confirmed that basic fact about Mr. Reed's first Visa directors meeting. They suggested other influential board members-representing BankAmerica Corp. and Bank One Corp., for example-would be of like mind.

Citibank is the biggest credit-card-issuing bank in the world. Mr. Reed, who presided over the mass-marketing explosion in the 1970s and 1980s that got it there, is regarded as passionate both about the card business and about asserting Citigroup's prerogatives as a stakeholder. (According to a Justice Department document relating to its current antitrust lawsuit against the associations, Citibank has ownership and voting rights exceeding 10% in Visa and 20% in MasterCard.)

Mr. Reed, who has taken seats on Visa's domestic and international boards, clearly made his point. And it goes well beyond the placement of a trademark. He is questioning the very foundations of the relationships among the banks, the brands, and the associations.

The biggest card issuers have long believed they should have a greater say in policy, but amid structural changes in the industry Visa, at least, is rethinking fundamental issues of organization and governance. (Citigroup does not have a seat on the MasterCard board and apparently has decided to focus on Visa.)

Malcolm Williamson, president and chief executive officer of Visa International, entered office Oct. 1 with a vow to shake things up. Acknowledging that large and small banks have different interests, he suggested Visa members might one day be able to pick and choose from a menu of services, instead of paying for everything Visa offers and using only some of it.

At a press conference in late September, Mr. Williamson said he knew branding was a hot issue for Mr. Reed. "The question is whether cobranding mitigates against" Citi's global ambitions. "I don't think so. I think there is room for two brands to work together congenially."

Visa U.S.A. is one of the six semi-autonomous regions within Visa International. Mr. Williamson is a member of the U.S.A. board along with the region's CEO, Carl Pascarella, and 12 bank executives.

Citigroup is entitled to two of those seats: Mr. Reed and Robert Lipp, co-CEO of global consumer operations.

Also at the most recent quarterly board meeting, Mr. Reed made another proposal: forming a new "payments committee" that would look at expanding Visa's role as a generic processing utility.

Catherine Allen, a former Citibank officer who is chief executive officer of the Banking Industry Technology Secretariat, said Mr. Reed has long held that idea, which she understood to mean "looking at what other kinds of payments could go through a utility," such as Internet transactions or certificates of authenticity. "It also means a nonbranded utility."

"For Visa to look at being a payments utility is right in line with what we need to happen," Ms. Allen said. "What's new here is that the banks have more of a collective vision of what they need to do, and they understand the need for utilities."

Credit card veteran Jerry D. Craft, president of Inficorp in Atlanta, said he envisions "the networks being separated from the brand."

Smaller-bank representatives were said to be taken aback by Mr. Reed's board proposal. Mr. Craft said they would continue to embrace the association brands because they are "clearly not in a position to take their brands worldwide.

"I think you're already seeing the foundations being laid for a Citibank card, a Bank One card, and an MBNA card."

As the top U.S. banks have gotten bigger, so have their disparities with smaller banks in terms of size, political and market interests, and financial contributions to MasterCard and Visa. Their service assessments, essentially dues, are pegged to dollar volume.

While the top issuers rely heavily on Visa's high-volume processing network, they are believed to have far less interest in the brand and its trappings. Industry sources say these banks see relatively little benefit for themselves in the millions of dollars Visa pumps into marketing, include pricey sponsorships of the Olympic Games, the National Football League, and other sports properties.

Two major antitrust suits-filed by the Justice Department and by major retailing organizations- promise to cost millions in legal fees while raising questions about Visa's and MasterCard's defense of the status quo.

MasterCard board member Charles M. Cawley, chairman and CEO of MBNA Corp., made a pointed comment at the American Bankers Association's annual card conference in September. He predicted both associations would "go out of the marketing business" and return what they spend in that area to member banks to "create our own personalities and views of the world."

It was a comment that would never have been uttered in earlier years, when card association managements enforced egalitarianism and forged compromises, when necessary, behind the scenes.

Mr. Pascarella reacted to Mr. Cawley by saying the issue is more complicated than "turning money back" and Visa must become a better "strategic partner with the people who are moving the market."

Mr. Williamson "recognizes that there is a diversity of interests among the Visa members," said David Brancoli, a Visa International spokesman. One option being explored, he said, is charging members fees for the services they use "on an as needed basis."

"How Visa and Malcolm achieve a balancing of the needs of members large and small is yet to be determined," said Mr. Brancoli.

In an interview in July, A. Sami Siddiqui, president of Citibank's U.S. card business, acknowledged that its relationship with the associations was changing. "As you grow the business, you are obviously interested in developing your own brand," he said.

Citibank spokeswoman Maria Mendler last week declined to comment on what Mr. Reed said at the Visa board meeting, but she said, "It has been many years that we have promoted our brand." Visa U.S.A. officials pointed out that branding is on the agenda of every directors meeting.

Some bankers not involved in the associations' inner councils were skeptical about the logo proposal.

"I'm not sure what the value would be to put the Visa or MasterCard mark on the back," said Charles M. Hegarty, president of bank card services at Wachovia Corp. "We've spent an awful lot of time and energy and money over the years convincing merchants that's what they should be looking for, and they should trust it and honor it. We run the risk of a lot of confusion in the marketplace if it just says the bank's name on the front."

On the other hand, Mr. Hegarty liked Mr. Williamson's idea of letting members choose from a menu of products and services. "If it means relief from what we have to pay Visa for things we really don't find as much value in, that could be a positive," he said. "By the same token, there are a lot of things that we do find value in that we would be happy to continue to support."

Mark K. Vitelli, senior vice president in charge of the U.S. cards business at People's Bank of Bridgeport, Conn., said he was "floored" by the description of Mr. Reed's proposal "given the amount of money being spent on the Visa brand."

One executive at a large bank, who asked not to be identified, compared Mr. Reed's proposal to the practice by some banks of putting network acceptance marks on the backs of debit cards.

"In certain markets, for certain segments, (moving the logo) would play just fine, and for other parts of the market the branded product would make sense," the banker said.

Alan Bergstrom, president of the Brand Consultancy in Atlanta, said moving the Visa logo to the back could "create some pretty significant inconsistencies from market to market. The last thing you want to do with any brand is create different identities."

Mr. Bergstrom said the idea had been tested-with disastrous results-by Diners Club years ago in a cobranding deal with Amoco Oil.

"Merchants overseas just didn't understand it, and they refused to accept the card," Mr. Bergstrom said.

"These questions about the role of the associations existed 25 years ago," said William Powar, a retired Visa executive who runs a consulting firm in Silicon Valley. The difference now is that the big banks own a much greater share of the card business. It is "a question of how much should Visa do to support the smaller constituency versus supporting the bulk of the business."

Mr. Reed's personal prestige and presence on Visa's board has raised eyebrows and caused some consternation.

"It's highly unusual in today's environment, because the other board members are not of his stature," said James Shanahan, a partner of Business Dynamics Consulting in Newark, Del. Most other members are senior executives directly responsible for card businesses.

"It's fair to assume, given the time this requires, that he has some important business objectives he wants to achieve," Mr. Shanahan said.

The thinking is that Mr. Reed may push for some significant changes, and because of his clout will get his way. One executive wondered if this might result in other prominent CEOs' sitting on the associations' boards-at a time when the Justice Department is alert to possible collusion.

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