The Supreme Court yesterday cleared the way for banks to begin issuing credit cards bearing logos such as American Express and Discover while continuing to offer Visas and MasterCards.

The high court let stand lower court rulings that Visa and MasterCard violated antitrust laws when they barred banks that issued their cards from also issuing cards bearing competing brands.

"This is a transformational event, [comparable to] the telephone company breakup," exulted Kenneth I. Chenault, American Express Co. chairman and chief executive. "What you are going to see is a tremendous increase in competition, which is going to lead to amazing innovation."

"This could change plastic as we know it," he said.

David W. Nelms, chairman and chief executive of Discover Financial Services Inc., a unit of Morgan Stanley, hailed the decision as "a victory for consumers, merchants and financial institutions."

Discover also announced that it has filed suit against Visa and MasterCard to recover damages it says it suffered as a result of the two associations' "anticompetitive business practices."

Discover did not specify the amount it plans to seek, but Nelms said it would be "substantial."

Visa has 323 million accounts, MasterCard has 264 million, Discover has 50 million, and American Express has 37.5 million, according to the companies.

American Express officials said the high court decision "reaffirmed the viability" of bringing such a suit, but they would not say whether the company plans to do so.

The high court's rejection of Visa and MasterCard's appeal ended a case originally brought by the Justice Department in 1998, following a two-year investigation. The department argued that Visa and MasterCard -- associations owned by their member banks -- do not compete with each other, but instead work together to fend off competitors.

The result, government contended, was to slow the development of innovations such as smart cards.

In 2001, a federal judge in New York ordered the two associations to drop their exclusionary rules, a ruling that was upheld by the U.S. Court of Appeals for the 2nd Circuit in fall 2003.

Both Visa and MasterCard expressed disappointment at the Supreme Court's refusal to hear their appeal.

"We continue to believe our rule is pro-competitive. That's why we defended it all the way up to the Supreme Court," said Daniel Tarman, senior vice president at Visa USA.

Tarman added that Visa officials believe that their competitors' problems resulted from their own products, not from Visa and MasterCard rules.

"Every consumer who wants an American Express card clearly knows how to get one. No court decision is going to fix that," Tarman said.

"We do not envision any fundamental changes in the marketplace," he added.

Further, Tarman said, banks will be reluctant to go into deals with American Express because "American Express competes with banks, [while] Visa is a bank-owned and bank-governed association."

Officials of MBNA, a big Delaware-based card issuer, said the company plans to issue its first American Express cards within the next several weeks, and marketing materials will be going out to millions of potential customers by the end of the year. These cards will be credit cards, many of them "affinity" cards that allow the cardholder to support a favorite institution or association, but some will be "rewards" cards that offer benefits to consumers who use them.

Some industry experts agreed that the decision will affect the credit card business, but they said it will be less than the winners are forecasting.

David Robertson, publisher of the Nilson Report, a California-based industry publication, said American Express will gain market share over the next few years, but added: "I don't think anyone should think this is going to revolutionize the credit card business because there's no way it could."