The credit card industry seems on the brink of crowning a new No. 1 issuer, a company whose strong faith in the Internet may reshape the way card products are marketed.

Assuming current growth patterns hold true, First USA, the credit card unit of Bank One Corp., will overtake Citigroup's Citibank this quarter as the company with the most card receivables. It may already have done so. Each bank had more than $63 billion in loans in the third quarter.

First USA, which Chicago-based Bank One bought in 1997, is distinguished not just by its size, but by its strategy to make its products widely available on-line. As it relentlessly pursues new business via the Web, First USA may be leading a race that other companies have yet to join.

Company officials are reticent. First USA would not make a senior executive available for this article. Though most of its growth has been by traditional marketing methods, industry observers say the company appears poised for a day when the Internet is a primary channel for attracting customers.

First USA already has "the biggest market share of people who shop for cards on the Internet," said Bruce Brittain, principal of Brittain & Associates of Atlanta.

That firm conducted a survey in September indicating that First USA attracted 25% of the 6.7 million people who said on-line marketing prompted them to apply for a card and open an account.

The company had signed up three times more accounts than its closest on- line rival, MBNA Corp.

"It is clear it (First USA) has a head start on everyone," Mr. Brittain said.

The operation based in Wilmington, Del., was one of the first to introduce a high-profile card product geared for Internet users. Its America Online Visa was introduced in 1996 and continues to be advertised heavily on Web sites.

More recently, First USA has signed cobranding deals with the Internet search engines Yahoo Inc. and Excite Inc. It has cut deals with Dell Computer Corp. and Auto-By-Tel, the Internet-based auto dealer.

It has also developed products of its own such as the E-card, which gives a 5% cash-back bonus for shopping with certain on-line merchants.

On the advertising front, First USA has signed several noteworthy alliance deals, the most breathtaking a $90 million, five-year contract with Microsoft Network.

On the customer service front, First USA is one of the only card issuers offering access to account balances and other information on its Web site.

Donald M. Berman of Cardholder Management Services in Plainview, N.Y., attributed First USA's "fast and furious" style to its penchant for product testing. "Not everything they launch is going to be a hit, and you don't know that unless you test," he said.

Before it was acquired by Bank One, First USA's portfolio was less than one-third its current size. The Nilson Report in August 1996 listed First USA as the fourth-largest card issuer, with $18.7 billion of managed loans, and the former Banc One as the 10th-largest, with $9.7 billion.

By January 1998, the combined balances had moved the company up to No. 3, at $38.4 billion. Banc One's merger with First Chicago NBD Corp. lifted the company another rung, and the agreed-upon addition of a GE Capital card portfolio-a deal announced this week-would on a pro forma basis push First USA ahead of the industry's perennial leader, Citibank, said Nilson Report president David Robertson.

As of Sept. 30, Citibank had $63.8 billion of card loans, Bank One/First USA $63.4 billion, the newsletter reported.

Until the Internet captured its attention, First USA was best known for other types of cobranding deals, which it still pursues. The company counts more than 1,400 affinity and cobrand partners, including myriad professional associations, colleges and universities, and nonprofit organizations. The company issues specialty cards for Honda motorcycle enthusiasts, cigar lovers, theatergoers, and many categories of sports fans.

First USA also has not abandoned its heavy reliance on direct mail. According to BAIGlobal, a research firm in Tarrytown, N.Y., that tracks credit card solicitations, First USA is the No. 1 mailer, reaching about one-third of the households in the United States this year. Citibank is a close second, reaching about a quarter of the households this year.

Among other bank card issuers with on-line aspirations is Fleet Financial Group, Boston, which has signed pricey contracts with the Internet portals Lycos and Go2Net. Visa U.S.A. and MasterCard International also have been doing their share of on-line marketing.

David Webster, a spokesman for First USA, said it wants to use the Internet to appeal to consumers' personal interests. For example, if someone is visiting his or her alma mater's Web site and First USA has an affinity program with that institution, the person could click on an icon to apply for the card.

"The Internet is a channel particularly suited to our segmentation strategy," Mr. Webster said.

First USA offers more than 2,000 card products, but not all are marketed on the Web, Mr. Webster said. The company's home page lets browsers select from 13 card categories, such as business, pets and wildlife, and fitness and recreation. Under each category are several cards a consumer can choose.

Most of the cards come with a fixed 9.99% interest rate, which is considered low by industry standards. Most do not charge an annual fee.

The E-Trade Platinum Visa is meant for customers of that on-line investment service. That and other products-like the cobranded cards with AOL, Excite, and Yahoo-are marketed on those partners' Web sites.

"As our scale grows, you are seeing an increase in the number of new products offered," Mr. Webster said. "We are trying to get them to market as soon as possible."

Some skeptics wonder about the value of Internet marketing and doubt First USA's on-line efforts have contributed significantly to its growth.

Whether Internet advertising yields creditworthy customers is "the big unknown," said Frances M. Dale, president of Entandem Inc. of Sterling, Va.

Some studies show that Web surfers are a high-income demographic, but there are also concerns that people applying for cards on the Internet have less-than-stellar credit records.

"I imagine if you are being turned down in the mail, you are going to turn to the Internet," said PaineWebber analyst Gary Gordon.

In any case, Internet marketing is seen as relatively inexpensive. If it costs $80 to $120 to gain a customer through conventional methods, experts say, the on-line channel cuts that in half.

Ms. Dale said being first on the Internet will benefit First USA much the way being first with platinum cards helped both First USA and MBNA.

The two monoline issuers "got the first picks (of platinum cardholders), and I don't think anyone has caught up with them yet," she said.

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