he head of Bank of America Corp. (BofA), a top card issuer and merchant acquirer, recently captured the industry's attention when he said that he might be interested in creating a new card network and brand.

Articles in the Charlotte Business Journal (April 14) and The Wall Street Journal (April 26) reported that BofA Chairman and Chief Executive Officer Kenneth Lewis was considering such a strategy because of the bank's size and scale, which would enable it to compete with the four major card brands: Visa U.S.A., MasterCard International, American Express Co. and Discover Financial Services. (BofA primarily issues Visa-branded cards.)

Three major acquisitions in the last two years have moved BofA to the top in issuing and acquiring: FleetBoston Financial Corp., National Processing Inc. and MBNA Corp.

Last July, Financial Insights Research Director Aaron McPherson predicted that because of these purchases, BofA would be able to "control its own destiny in the card market." The bank could split off from the card Associations to create a new brand and closed-loop network, which would give it control over issuing, processing and acquiring.

In the May 2006 report, "Bank of America Considering Launching New Card Network," McPherson suggested that with such independence "BofA could raise interchange fees and set its own rules ... It could also set up integrated loyalty programs with selected merchants."

An April 28 report from Thomas Weisel Partners analyst Mark Sproule listed other possible advantages, including increased fee income and an increased local presence with merchants. Both analysts agreed, however, that Lewis' public statements may only have been a way to position the company for future negotiations with Visa.