NextCard Inc., the company that created an Internet-based Visa card program, has applied to the Office of the Comptroller of the Currency for a banking charter.

The year-old NextCard Visa product, which touts its 30-second response time for on-line applications, is issued through Heritage Bank of Commerce in Santa Clara, Calif.

NextCard-which recently changed its name from Internet Access Financial Corp.-is "engaged in discussions with regulators for having our own bank in place," said Jeremy Lent, chief executive officer. He said such a move would offer "greater flexibility," but he would not elaborate on its strategic significance.

A report by Piper Jaffray Inc. said the San Francisco-based company aims with its Visa program to "build an on-line banking business model around a profitable product rather than an unprofitable one" like checking accounts.

Calling NextCard a "stellar example of Internet-based credit card issuance," Piper Jaffray said, "consumers have shown much greater willingness to try debt products from new providers than deposit products."

It said NextCard's "business model has the potential to dramatically change the on-line banking landscape."

Mr. Lent, a former chief financial officer of what is now Providian Financial Corp., said his "initial vision" in founding NextCard in 1996 was that "the Internet represents a direct marketing channel that will blow away direct-mail marketing," in part because of its "power of customization."

NextCard has just begun letting cardholders put a photo of their choosing on their plastic cards. Customers can select from an on-line gallery of 1,700 images or scan in a photo of their own. Some customers may also choose their interest rates, opting for lower rates as they transfer more balances to the account.

Its competitors include large card issuers with Internet-tailored products, such as cobranded Yahoo Visa cards from Bank One Corp.'s First USA division. MBNA Corp. has begun issuing a Visa card with Earthlink, an Internet service provider, that offers rewards for shopping anywhere on- line.

NextCard said it has fielded more than a million card applications through its Web site, though it will not disclose customer numbers. MBNA says it rejects 80% of on-line applications because they are fraudulent or do not meet credit criteria.

Mr. Lent said the surge of interest in on-line card marketing by First USA and others has "validated the Internet channel." He said all on-line issuers benefit from the awareness that Internet advertising creates.

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