Citigroup Inc. may not just want out of Visa. It may eventually want to escape any kind of association entanglement in order to call its own shots as a proprietary card issuer a la American Express or Discover.

It is pure speculation at this point, but people in the credit card and transaction processing businesses find this idea plausible. Some were saying so even before the Feb. 5 resignations of Citigroup co-chairman John Reed and consumer banking co-chief Robert Lipp from the Visa U.S.A. board.

Though Citigroup is expected to transfer most of its business to MasterCard International, gaining the right it seeks to remove the shared brand name from the front of its cards, it would still be a member of an association, subject to service fees, operating rules, and other conditions set by committees.

Might the world's one truly global consumer bank, which is so intent on turning its Citi brand into something as powerful and ubiquitous as Coke, also be able to build and control an independent payments infrastructure?

If the falling-out with Visa stemmed from Citi's refusal to pay a disproportionate share of advertising and other association freight, won't the bank only have partially reduced its obligations through the reported MasterCard arrangement?

Why not go all the way to proprietary status? If nothing else, the lack of association connection would remove contractual obstacles to a Citigroup acquisition of American Express Co., which Mr. Reed had explored before last year's merger of Citicorp with Travelers Group.

Industry experts say all of this is possible-over time.

Citigroup would have no problem standing on its own as a card issuer and processor. Long the leader in receivables, its U.S. total of $69.6 billion at yearend was a shade lower than that of the faster-growing Bank One Corp. No financial company matches Citi's worldwide distribution network.

It lacks bulk in merchant acquiring, the retailer card services that the old Citicorp sold off in the early 1990s and only recently returned to. And there would be a need to coax millions of retailers to accept its brand on a par with the other majors.

There are ways to do that-perhaps by cooperating with a merchant processor like First Data Corp. and/or by buying American Express, which Citigroup could partially finance with saved association expenses.

Some people in the industry say Citigroup's pact with MasterCard-which has not been publicly confirmed by either side-sounds every bit like an acquisition, and a more formal takeover could be in the offing.

Going it totally alone would be "a possibility" for Citigroup, but "it will ultimately come down to a cost-benefit analysis," said Alex W. "Pete" Hart, a former MasterCard International president and now an independent consultant.

"The fact is that a card is of limited value in the absence of ubiquitous acceptance," Mr. Hart said. "It's certainly not accidental that there are these two huge, ubiquitous associations. Certainly Amex has worked very hard, but it still lags somewhat behind MasterCard and Visa in terms of worldwide acceptance."

The developments of the last two weeks revived speculation that Citigroup might go after American Express. Among Amex's assets is a self- contained merchant network, a "closed loop," in contrast to the MasterCard and Visa utilities.

MasterCard's network might take Citigroup in the direction of a closed loop, experts said. Visa rejected Mr. Reed's demands because they would have "reduce(d) the Visa organization to that of basically a processor," said Visa executive vice president William Stewart.

Visa did not want to bend its "business model" to suit Citigroup's, Mr. Stewart said. MasterCard apparently was more pliable.

"When you're the No. 2 association, it's a lot easier to make a decision like that," said an executive who has worked as a consultant and vendor to many of the largest banks.

Citi has gotten what ity wanted from MasterCard and "doesn't need to go any further in terms of autonomy," said Roger Peirce, a former Visa International and First Data Corp. executive who is now chief executive officer of U.S. Wireless Data Inc. in Emeryville, Calif.

MasterCard brings Citi "the benefits of global acceptance and an organizational mechanism for setting the rules necessary for global sharing," said Mr. Peirce. "Sometime in the future, possibly, (Citi) can take the next step" of shedding the MasterCard affiliation, "but it may not even be necessary."

"I think Citibank could definitely go it alone," said Stephen J. Hucal, the former head of KeyCorp's card business who now supervises the private- label program of Canada's largest department store chain, Hudson's Bay Co.

And if Citi did so, "I firmly believe they would be successful."

Mr. Hucal worked at Sears, Roebuck and Co. when it was making heavy investments to build what is now the Discover-Novus network. He said Citigroup could emulate the do-it-yourself approach, or go out and buy Novus from its current owner, Morgan Stanley Dean Witter & Co.

"The first leg that has fallen off here is that the MasterCard bug is going to the back of the card," Mr. Hucal said.

Citigroup says it remains committed to the card associations and will continue to issue Visa as well as MasterCard cards.

But Citigroup and its predecessor Citicorp had a long tradition of going their own way and shunning help and cooperation. The proprietary bias was tempered in recent years in such areas as ATM sharing and Internet technology alliances. Citi was instrumental in the formation of the research cooperatives Smart Card Forum, Financial Services Technology Consortium, and the Bankers Roundtable's Banking Industry Technology Secretariat.

The bank's merger partner, Travelers Group, brought a management discipline that would be expected to underscore cooperation and expense sharing. But with its economies of scale, Citi can probably justify continuing to do its card processing in-house. And there is certainly a strong economic justification behind Mr. Reed's and Mr. Lipp's walkout from Visa.

One card industry veteran recalled that Citi had a proprietary program in the Baltimore-Washington region, Choice, in the 1980s and early 1990s. The effort was hobbled by difficulties signing up merchants, he recalled.

Citigroup still owns the Diners Club and Carte Blanche brands in the American Express-dominated travel and entertainment sector. They have limited acceptance and relatively small-but loyal-cardholder followings.

As a uniquely global organization, "Citi has to be thinking about what to do with Diners Club and Carte Blanche," said H. Robert Heller, a former Visa U.S.A. president and now executive vice president of Fair, Isaac & Co. "It has to be thinking about doing its own clearing."

Mr. Heller suggested that a closed loop could seem eminently affordable. "First Data can handle a transaction at half Visa's price," he said. "Visa could be reduced to a clearer of last resort, only handling the highest- cost transactions."

Mr. Peirce, while at First Data, had to withstand criticism from Visa and others that he was out to create a closed loop that would bypass the association networks. He said a more likely scenario now would be for Visa and MasterCard to evolve into "organizations that allow major financial institutions to develop their own brands, but work within a structure of rules and systems."

Large banks could begin issuing something akin to private-label cards, while smaller institutions would still rely on generic products from the associations, he said.

Because MasterCard and Visa are so widely accepted, "the brand as an acceptance mark becomes less important" and the association "package of services" becomes more important, Mr. Peirce said.

"The question people are asking now is, to what end do we create even stronger brands than Visa and MasterCard are today?" said Mr. Hart, who became chief executive at Advanta Corp. after he left MasterCard in 1994. "If the public perception is that acceptance is virtually ubiquitous, why build greater strength among these brands?"

Alan Bergstrom, president and CEO of the Brand Consultancy in Atlanta, doubted that a Citigroup proprietary card could "ever be as ubiquitous as the Visa brand."

Moreover, a card lacking an association bug would "create confusion in the marketplace," he said. "You force the consumer to say, 'Gee, what kind of a card is it? Maybe it's easier to pull out American Express.'"

Yet Citigroup may be "the forerunner of the de-emphasis of the association and regional brands by the larger institutions," said Stan Paur, president and CEO of Pulse EFT Association, Houston.

Jerry D. Craft, president and CEO of Inficorp, Atlanta, called Citigroup one of the few institutions "that can hope to have acceptance worldwide" for a card of its own.

It would take a few decades to build a critical mass, but "Citicorp already has a good start with Diners Club" and "a lot of tentacles in the United States and around the globe," said Mr. Craft, who formerly worked at First Data and whose firm manages card portfolios for banks.

One industry executive, who spoke on condition of anonymity, said he believes Citigroup's "ultimate goal is to buy MasterCard.

"It makes perfect sense," he said. "Their issue today is on the acceptance side, and controlling or buying MasterCard would give them that."

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