Visa International last year abolished the custom of an annual convention for member banks, but in one way its scaled-down show last week in Milan was bigger than ever.

With the help of about two dozen systems vendors, Visa staged an unusually comprehensive demonstration of what it termed the "digital revolution" - everything from a "virtual branch" on a computer screen to wireless shopping and banking via hand-held devices.

The audience at what Visa now calls its international all-board meeting came away dazzled by the display.

"Very, very impressive," exclaimed Yaacov Dior, representing Bank Leumi of Israel.

"Just outstanding," added Robert Hunter of Chase Manhattan Bank in New York.

Such responses were typical, and all the more noteworthy considering that these are technology-literate bankers. The annual meeting brings together the 100-plus members of Visa's international and regional boards of directors - either chief executives or top retail bankers who report to them.

But perhaps few of Visa's guests ever saw so much of the supposed future all in one place, and with the opportunity to try it out.

Several people grabbed the portable personal communicators and tried to click their way through a remote banking transaction. Others lingered and marveled at a videophone, making visual contact and conversing with a Visa employee in the United Kingdom, courtesy of British Telecom.

"Remember all the talk about the videophone? Well, it's here," said Carol Coye Benson, the Visa staff member who coordinated the portion of the exhibit titled "the home." And that was the point of the exercise, which Visa International president Edmund P. Jensen related back to the company's strategy in his speech at the business meeting.

"As we become more connected and more digital, we necessarily become more global," Mr. Jensen said. "Consumers will initiate transactions in foreign countries while sitting in their living rooms.

"These global opportunities can be realized by the global banking industry if it maintains global standards, specifications, rules, discipline, and interoperability. This requires collective action. That is Visa's role."

* * *

Underscoring the "digital revolution" theme, Visa imported Nicholas Negroponte, author of the recent best-seller "Being Digital," as keynote speaker.

Mr. Negroponte, though just gaining public recognition, is an old hand at interactivity as founding director of Massachusetts Institute of Technology's Media Lab. He held the Visa group spellbound for almost an hour in what served as an ideal introduction to the hands-on exhibits.

Mr. Negroponte knew he was on friendly turf when Mr. Jensen quoted him: "The information highway may be mostly hype today, but it is an understatement about tomorrow."

The MIT professor then used a recurring idea from "Being Digital" and from his columns in Wired magazine - the distinction between "bits and atoms" - to discuss how the consequences of this technological revolution will be "global and absolutely enormous. We haven't seen anything like it before."

As Mr. Negroponte puts it, the physical-industrial world and its laws are built on atoms, the digital-information age on data bits. On matters ranging from taxation to censorship, he said, "Governments can stop atoms at the border, but not the bits."

"Cybercash gives governments heartburn," Mr. Negroponte said, referring not to the company of that name but the notion of money transferred on open computer networks like the Internet. "It removes all traces of transactions, and taxes become voluntary."

Mr. Negroponte said banking is "ahead of the world" in coming to grips with the transition. "You are doing with bits what your predecessors did with bullion," he said. "You are at a very interesting place."

* * *

To doubters, Mr. Negroponte asserts that "all 15-year-old Americans are digitally literate." Aside from school requirements, they spend millions of teenager-hours a year in interactive nooks on the Internet called MUDs (multi-user dungeons) and MOOs (multi-user object-oriented).

He believes these are leading indicators of a digital society that turns hierarchical structures on their heads.

"When a formation of ducks flies south, there is no lead duck," Mr. Negroponte said. "These are autonomous-behaving entities." In those terms, the Internet world is "not anarchy, but a controlled decentralized structure with no 'head duck'."

Given the U.S. trend, Mr. Negroponte dismisses complaints that the technology will separate coming generations into computer haves and have- nots.

"Being digital-rich or -poor is a generational issue, not economic," he said.

Mr. Negroponte left Visa's meeting for Paris. His visit included an appearance on one of the French television talk shows that are often less entertainment than panel-style debates among literati. In this case, Mr. Negroponte, speaking French, appeared to parry all challenges to his digital visions, though he may not have converted all skeptics.

* * *

Visa's "digital revolution" demo was a lesson in the collision of atoms and bits.

The equipment was deployed in several rooms of the Cariplo Conference Center in central Milan, a converted palace owned by Cassa di Risparmio delle Provincie Lombarde, the world's largest savings bank and host of the all-board meeting.

The contrast between the classical and futuristic was more than symbolic. Visa staffers were scurrying for days trying to align the equipment with the necessary telecommunications lines and air conditioning. Despite some reported near-disasters, it all came together in the end.

Visa organized the displays around three "virtual" locations - the home, the merchant, and the member bank. Most were live demonstrations of available systems. Among the highlights:

* Several screen telephones, with and without smart card readers, from Philips Electronics and U.S. Order, as well as Visa's own Visa Interactive banking packages.

* Several examples of electronic shopping via computer or interactive television, from providers including Internet Shopping Network of Palo Alto, Calif., ShopperVision of Norcross, Ga., and IT Network of Dallas.

* Samples from Portugal's SIBS system of point-of-sale terminals, including a postage stamp dispenser and gasoline pump, that accept stored- value smart card payments.

* A self-service banking kiosk from AT&T Global Information Solutions, which has begun to be deployed in the United States; and what is essentially a bank branch on a touch-screen computer terminal called Interact, developed by Andersen Consulting and currently deployed at several Nationwide Building Society locations in Britain.

Each person at the meeting was issued a personalized smart card and was encouraged to use it in the various payment devices. With these transactions came frequent-shopper credits that could be converted in the end from bits to atoms - a souvenir Visa Olympics T-shirt.

* * *

All the excitement over the bits and exhibits may have overshadowed the conventional part of the all-board meeting, which included speeches by Mr. Jensen, Visa International board chairman Peter Ellwood, and Wesley Tallman, the card association's president of product and information services.

Mr. Jensen proclaimed the virtues of collective action that have created a brand "significantly more powerful than American Express or JCB or Discover or Diners . . . It is even more powerful than MasterCard and Europay."

In another, slightly veiled slap at competitors and competing ideas, he said Visa "provides you with unique profit opportunities that would not have been available through a multitude of fragmented organizations. . . . Splinter organizations cannot begin to realize the scale, brand, or connectivity advantages Visa has today."

He added that Visa will not change its role in authentication and settlement of payments worldwide - and in cyberspace. "What will change is how Visa does it," entering partnerships with selected technology suppliers and extending its "connectivity" with banks and merchants to include the consumer.

He emphasized Visa's growing role in customer relationships and drove it home by labeling the chip card used for delegate identification in Milan "Relationship Card."

* * *

Mr. Tallman said Microsoft Corp., Visa's partner in developing transaction security for on-line networks, exemplifies the opportunities opening up in both "content" and "access."

Microsoft "sees control of access as a competitive advantage," he said. That's "an attitude shared by many providers."

Deconstructing aspects of Microsoft, Mr. Tallman predicted that after its failed bid acquire Intuit Inc., the company will redirect attention to its Money software and "compete in the electronic wallet business in about 10 years."

It may also eventually move toward news, entertainment, and the certification and authentication of transactions.

"All this leads to a relationship model more powerful than even what we talk about - a supercustomer relationship - in which they (Microsoft) get paid with a tick of the meter" by both consumers and content providers.

* * *

It fell to Mr. Ellwood, chief executive of TSB Bank in London, to deliver the good news about Visa International's first-quarter performance. The number of cards topped 400 million, merchants topped 12 million, and sales volume jumped 26%, to $172.2 billion.

Volume growth in the largest region, Visa U.S.A., was 33%, the highest in 11 years and exceeded only by the 39% in the smallest region, Latin America. All five regional entities rose in double digits, an achievement that MasterCard alone claimed for 1994.

Mr. Ellwood sought to bury any suspicions from past eras that Visa is too aggressive for its members' good. "Instead of looking for shadows, hidden agendas from Visa, threats, worries, and ghosts, we should all rejoice, be proud, and use this, our organization of Visa International. . . . Visa is not a competitor, it is something we own."

Scott Marks, chairman of First Chicago Corp.'s FCC National Bank and a Visa International director, added his support.

"This management team is very sensitive to the mission of serving members," Mr. Marks said. "We all recognize the world of financial services is changing, and we have to change with it."

He said he agreed with Mr. Negroponte that the change will be "enormous. The only question is the form and pace it will take."

"Individual institutions won't be able to manage" the investments required," said Lee Chaplin Jr., regional banking executive at Barnett Banks Inc. "Visa is building a railroad, and there will be lots of opportunity on it."

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