Visa officials are airing some second thoughts about the way they approached home banking.

Peter Ellwood, chairman of the Visa International board, told a meeting of the card association's directors that its Visa Interactive subsidiary might have been more successful if it were structured according to current strategic principles rather than those of 1994, when the remote banking unit was formed.

Edmund Jensen, Visa's chief executive officer, conceded in an interview that "we weren't that smart" when the nucleus of Visa Interactive was acquired from Intelidata Technology Corp., then called U.S. Order.

That occurred in Mr. Jensen's first year in the Visa job. Since then, both bank card associations' home banking units-Visa Interactive and MasterCard's MasterBanking-faltered. MasterBanking is dormant, and Visa Interactive has reportedly been shopped to potential buyers, even though its more than 70 U.S. bank participants make it one of the larger programs by that crude measure.

Mr. Ellwood and Mr. Jensen gave no indications about Visa Interactive's ultimate fate. Their candor, before an audience of 400 at Visa's annual "all boards" gathering, was meant to underscore how far the organization had come in terms of flexibility and adaptiveness.

Visa Interactive suffered, Mr. Ellwood said, from having to be funded and supported by all members rather than the subset that actually wanted it. He held up as an example VisaNet do Brasil, a merchant processing company controlled by a group of Brazilian banks, "where Visa has a small equity stake but lends its name, its brand, and its expertise to meeting a need which is welcomed by the banks."

In less than a year, VisaNet do Brasil has become the specialized Visa acquirer in the country, is making money, and is the model for similar ventures coming in Peru and Uruguay, said Visa Latin America president James Partridge.

Mr. Jensen said Vital Transaction Services, Visa U.S.A.'s merchant processing joint venture with Total System Services Inc., similarly delivers "all the benefits of both a cooperative and commercial entity."

"This kind of approach, which meets the needs of a limited number of members who take the pain or the gain, seems to me to have advantages over the approach we took with Visa Interactive," said Mr. Ellwood, chief executive officer of TSB Group of London.

The interactive service "was subscribed to by only a relatively small number of banks, but the total membership of Visa had to absorb the financial implications," he noted. "

I wonder what would have happened if it had been set up on a commercial basis, with Visa having a small equity stake and with those members who chose to be the shareholders ... . responsible for the generation of profit."

Mr. Ellwood said this type of thinking is still at an early stage, but he suggested it takes "a hard-nosed commercial focus" to compete with ventures like Integrion, the IBM-coordinated group that posed problems for Visa Interactive. He envisions Visa focusing on its "core strengths" while otherwise enabling members around the world, when warranted, to "have a different view of life" than an association.

When asked if anything is preventing Visa Interactive from moving to the new model, Mr. Jensen said, "No ... but that is not to say that it will."

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