Integrion Financial Network has agreed to take the troubled Visa Interactive remote banking program off the card association's hands.
Culminating months of negotiations, the Integrion and Visa International boards have approved a deal. But sources familiar with the process said a definitive agreement and announcement could still be weeks away.
The discussions have been the subject of persistent rumor and speculation in home banking circles. Visa officials had essentially conceded their failure to make Visa Interactive one of an elite few providers of remote systems for banking and bill paying.
Yet Visa Interactive signed 90 financial institutions, which would likely add momentum to the Integrion program that International Business Machines Corp. launched last year with 16 major banks in the United States and Canada.
Sources said disagreements about the price of Visa Interactive were resolved largely in favor of Integrion. One observer deemed the terms better than a fire sale.
Visa could even end up paying Integrion to fulfill its obligations to participating institutions.
Neither Integrion nor Visa would comment Friday on any agreement they may have forged.
"We have been exploring common ground" with the Integrion group, said Visa spokesman Greg Jones."It is our responsibility to always explore options .... If changes are made, they will not compromise our commitments to banks and to their customers."
Visa launched the interactive unit in August 1994 when it bought a part of U.S. Order, an interactive services company that has since changed its name to Intelidata Technology Corp. The companies continued to work closely and have space in the same Herndon, Va., office building.
Intelidata was said to have been another potential acquirer of Visa Interactive, as was Online Resources and Communications Corp. of McLean, Va. Some Visa Interactive banks reportedly wanted to consider transferring to Checkfree Corp.
Visa spent $15 million on the 1994 acquisition, plus royalty payments of 66 cents per customer per month. About 125,000 customers from 41 banks were using the service as of last month, and Visa officials said the numbers had grown dramatically this year.
Even after selling Visa Interactive, the San Francisco-based card association would remain active on the "back end" of transaction processing, particularly through e-Pay, its automated billing and remittance system.
Integrion's advantage as a suitor stemmed in part from the fact that prominent Visa Interactive customers are also on the Integrion board, including Comerica Inc., Fleet Financial Group, and First Bank System Inc.
There are also overlaps between the card association's board and Integrion, including BankAmerica Corp., NationsBank Corp., and Royal Bank of Canada. Visa directors had reportedly come to agree that Visa Interactive and its structure did not appropriately fit the association's strategy of serving as an "enabler" for members.
One of the few unresolved issues, sources said, is what sort of participation, if any, Visa will have in the Philadelphia- and Atlanta- based Integrion organization. As an electronic payments utility, Integrion intends to maintain neutrality between Visa over MasterCard. Visa thus could get a nonvoting board seat even if it owned substantial equity.
But some people warn that Integrion will encounter the same kinds of strategic and political pitfalls as the Visa association.
"I believe that the strength of Integrion lies in setting standards as opposed to being an operating company," said Matthew P. Lawlor, chairman of Online Resources.
"Any merger between Visa Interactive and Integrion would slow down that process of setting standards, because with Visa Interactive would come a lot of obligations to relatively smaller banks that would potentially take Integrion in a different direction," he said.
Each affected bank, meanwhile, would have to assess the meaning of a new affiliation.
"Any change in strategy would be premature to discuss," said spokesman Paul Mason at Wachovia Corp., one of the non-Integrion Visa Interactive banks. Others in Visa Interactive include units of First Union Corp., Star Banc Corp., Zions Bancorp., Fidelity Investments, and Merrill Lynch & Co.