ORLANDO -- The chief executive of Visa U.S.A. urged bankers on Wednesday to attack American Express Co. by lodging complaints with Amex subsidiaries that serve banks.

In his annual "state of the industry" address to the national bank card conference, H. Robert Heller called for a concerted response to the "attack that Amex has launched on bank cards under the guise of consumer education."

He was referring to a series of seminars sponsored by American Express Travel Related Services Co. that have become forums for consumerist attacks on bank card interest rates and other pricing policies.

|Let Them Know Your Views'

Mr. Heller told bankers who buy card processing services from First Data Resources, an American Express affiliate, or who provide lines of credit for American Express gold cards to "let them know your views on that topic."

One recent American Express-sponsored seminar in San Francisco typified the current friction with Visa, which has long been urging its member banks to be wary of the travel-and-entertainment card giant.

In San Francisco, Elgie Holstein of Bankcard Holders of America, a self-styled industry watchdog based in Herndon, Va., railed against the "hidden costs" in bank credit cards, such as late fees and over-the-limit penalties.

Despite Mr. Heller's combative tone, he was far less militant than his predecessor, Charles T. Russell, when American Express launched its Optima card in 1987.

Attack Urged

Mr. Russell, currently chief executive officer of Visa International, wanted Visa issuers to retaliate against the revolving-credit product that was seen as a direct competitive threat. He sent his members letters asking them to stop selling American Express travelers checks and other products.

Mr. Russell was called on the carpet by a congressional committee for inciting antitrust behavior. He also attracted the interest of several state attorneys general who later sued MasterCard and Visa to prevent them from launching a joint debit card known as Entree.

Mr. Heller stopped short of suggesting that banks sever their ties with Amex.

Even though that suggestion has been made in the past, Omaha-based First Data Resources has grown and consolidated its hold on the No. 1 position in the card processing business.

Arm's-Length Relationship

Its parent, First Data Corp., is 54% owned by American Express Co., and the company takes pains to emphasize the arm's-length nature of its relationship with Amex. First Data Corp. contributed $995 million of American Express's $25.8 billion in total revenue last year.

American Express has also remained No. 1 in travelers checks despite inroads by MasterCard and Visa. Amex officials have repeatedly cited its leadership as a sign that its check sellers are voting for quality and customer satisfaction.

Also in his speech, Mr. Heller spoke out against the cobranding policy, championed by MasterCard, that has led General Motors Corp. and General Electric Co., among others, to offer that brand of card.

"How can you ensure that the customer receives top-quality service?" he said. "Certainly not with a conbranding partner to whom you rent space on your card and whose transactions clear and settle on an entirely different system over which you have no quality control and whose risk characteristic are uncertain,"

Store Card Proponent

In stark contrast, MasterCard International president Alex W. Hart reiterated his support for the concept, particularly in tandem with retailers.

Mr. Hart said proprietary store card account for 31% of all consumer credit outstanding, and represent growth potential for banks.

Like Mr. Heller, Mr. Hart touched on American Express and commended Visa for the way it has battled Amex's prestige image. But the warned bankers to beware of Amex.

"We believe they will introduce Optima in a new fashion," he told the card conference attendees. "How they will do so gracefully is beyond me."

Nationwide Plan Scrapped

American Express once had planned to offer Optima to consumers nationwide - not just as an adjunct to green, gold, or platinum cards. Those plans were nixed when the Optima program suffered huge deliquencies and chargeoffs.

Mr. Hart reported that MasterCard's crusade against another card, Sears, Roebuck and Co.'s Discover, is successful. The retailing giant lost about 300,000 cardholders in the second quarter, he said.

MasterCard will continue to promote itself as the card for the value-conscious consumer, Mr. Hart vowed, while Visa will remain "more aspirational." "Discover took the value positioning early on, and shame on us for allowing them to run away with it," Mr. Hart said.

Overall, both chief executives were upbeat about the card business, reporting about 8% sales growth in 1991 - even as the U.S. economy shrank.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.