Diners Club Inc., adding its voice to an increasingly contentious issue, has filed a protest against a plan by Visa International to prevent its members overseas from issuing competing card brands, sources say.
Word of the protest surprised and puzzled observers because Diners Club is an affiliate of Citicorp, Visa's largest member. Diners Club and Citicorp declined to comment.
The sources said Diners Club has filed a complaint with the Brussells- based European Commission, following in the footsteps of American Express Co. and Dean Witter, Discover & Co.
The protest comes amid mounting controversy over Visa's membership policies both overseas and at home.
Earlier this month, American Express chief executive Harvey Golub shocked the credit card industry by urging Visa members to ignore an association policy and issue American Express cards.
Visa' vice president of public affairs said, "We are aware of the complaint, but we have not seen it yet." She declined to elaborate.
One source, who did not want to be identified, said that Citibank officials were meeting on Friday to discuss the "appropriateness of the complaint." A Citibank official confirmed that Robert Rosseau, president and chief executive of Diners club, was in Citibank's offices in New York on Friday.
"There is a great deal of internal consternation at Citibank regarding the complaint," the source said. "And over the past couple of days, it has become clear that there is an uproar over this."
Industry observers said they would be surprised if Diners Club filed the complaint without its parents' approval. Observers suggested there may have been a lapse in communication between Citibank and Diners.
To be sure, Diners Club has a measure of independence from Citicorp overseas. Though it is wholly owned by Citicorp in the United States, some its operations abroad are owned by other banks.
If Visa adopts a rule banning its members from issuing competing card brands, Diners Club's international strategy could be threatened. Diners Club's market share is much stronger abroad than in he United States. There are 7.1 million cardholders worldwide.
"I assumed that with Citibank's clout, it would look after Diners in any international rule," said the source, "but the fact that Diners feels threatened means that they didn't get such assurances."
American Express and Dean Witter were encouraged by Diners Club's complaint.
American Express spokesman Michael O'Neill, said, "It is a sign that resistance to the bylaw is strong and getting stronger."
Dean Witter, for its part, said in a statement: "Diners Club's action took great courage and we applaud that. The action shows that the proposed bylaw is not acceptable even to affiliates of Visa members"
Several weeks ago American Express and Dean Witter challenged a similar Visa rule that prevents U.S.-based members from issuing competing card brands. At a credit card conference in Atlanta, American Express' Mr. Golub invited Visa's U.S. members to issue American Express cards and essentially drop Visa to do so.
The weight of that invitation is still reverberating throughout the card industry as bankers struggle to understand the full implications of Mr. Golub's remarks.
While the situation concerning Visa's bylaw in the U.S. is unlikely to be resolved anytime soon, the international arena is fast becoming a battle ground.