Before MasterCard chief executive officer Eugene Lockhart departed for a top job at BankAmerica Corp., he left executive vice president Henry Mundt a present.
Mr. Mundt, 42, who was diligently toiling at the debit portions of MasterCard activities, had Mondex thrust upon him.
MasterCard International Inc. acquired 51% of Mondex International, the global electronic cash organization, in February. Three months earlier, when MasterCard announced its agreement to acquire the smart card venture, which grew out of Natwest Group in London, Mr. Lockhart added it to Mr. Mundt's portfolio.
The move raised Mr. Mundt's profile but has not changed his low-key personality or management style, which made him one of a select few from the previous MasterCard administration of Alex W. Hart whom Mr. Lockhart kept and elevated in his inner circle.
In fact, Mr. Mundt's warding over Mondex has been hardly noticeable from the outside. Mondex International CEO Michael Keegan, a member of the British team that brought Mondex to its current state of youthful exuberance, remained in the public spotlight while reporting to Mr. Mundt. Similarly have executives speaking for Mondex's bank-owners, such as former Wells Fargo banker and Mondex USA franchise president Janet Crane, seized the bully pulpit.
Meanwhile, back at MasterCard headquarters in Purchase, N.Y., Mr. Mundt said recently that he expected to spend at least half his time on Mondex affairs. It was clear from an interview that he had been doing his homework - and reconnecting with earlier experiences relevant to Mondex and its growing pains.
"I see an analogy to 1986-87," said Mr. Mundt, who at that time was executive of Cirrus System Inc., the national automated teller machine network that several major banks - essentially a MasterCard splinter group - organized in the early 1980s.
"MasterCard had its MasterTeller network, which reflected demand in the marketplace for a shared ATM service," Mr. Mundt recalled. The card association "did a build-or-buy analysis," he said, and opted to buy Cirrus. The deal was completed in early 1988.
G. Henry Mundt 3d, known to the industry as a protege of Cirrus chief executive officer Bruce Burchfield, "wondered how much MasterCard could bring to the table."
Mr. Burchfield eventually stepped aside, established an entrepreneurial payment processing business, and enriched himself by selling it to Intuit Inc. Mr. Mundt moved up to the top Cirrus job. Today, Cirrus connects more than 315,000 ATMs around the world, up from 15,000 when MasterCard acquired it.
"What MasterCard had was incredible distribution capability, plus a credibility and stamp of approval," Mr. Mundt said.
To him, and no doubt to Mr. Lockhart, the parallels were striking. Vying with Visa International, which by many accounts was off to an early lead with its Visa Cash smart cards, MasterCard faced a similar "build or buy" decision.
In Mondex, "MasterCard has bought superior technology, the members are behind it, and the reaction around the world has been very positive," Mr. Mundt said.
To be sure, questions continue to swirl about MasterCard's strategies, internal politics, and the general prospects of smart card technology.
Has the venture lost a champion in Mr. Lockhart, who became BankAmerica's chief of retail banking this month, succeeded at MasterCard by his top international lieutenant, Robert Selander?
Does Mondex have an answer, or should it, to Visa International's recent decision to hitch its strategy to the trendy and Internet-friendly Java Card standard promulgated by Sun Microsystems Inc. and supported by much of the smart card establishment?
How will Mondex fill its remaining geographical gaps, particularly continental Europe, where MasterCard affiliate Europay International has gotten good response to a chip system it developed called Clip?
The second question may be addressed today, when MasterCard said it will announce an "open platform operating system."
Mr. Mundt may have begun to answer the last question by hiring Richard Phillimore, the Europay executive in Brussels who was responsible for Clip, to be his top chip card aide.
The appointment "was a good way to tie MasterCard, Mondex, and Europay together" while sending a signal that Mondex at the headquarters level will not be dominated "by a bunch of Americans," Mr. Mundt said.
"There is stronger demand in Europe now," said Tom Carty, head of GTE Corp.'s Cybertrust unit, which has worked closely with MasterCard and Visa on the Secure Electronic Transactions standard for Internet payments. "They will probably want to be careful not to push Mondex too abruptly in Europe, but they certainly are taking the long view."
A consultant familiar with MasterCard, who asked not to be identified, said anything involving Mondex can be politically dicey.
"You have an association, MasterCard, that bought Mondex, which is also an association," he said. "It's an unusual situation that makes it difficult to get things done. There is a constant state of flux, and the effort becomes highly dependent on the people in charge."
Mr. Mundt acknowledged that the task ahead is much more marathon than sprint. And there will be a juggling aspect to the job because "Mondex will move at different speeds in different parts of the world." The Hong Kong population almost overnight grabbed tens of thousands of Mondex chip cards; the pilot in Guelph, Canada, passed 5,000 cards within three months of its February launch; the United States is still near zero.
"Cirrus radiated out from an initial eight banks, and Mondex will go the same way," Mr. Mundt said.
He spoke of a "five-year horizon" before the stored value card or electronic purse concept begins to make a real dent in U.S. cash-using habits. "I think 10 to 15 years is probably realistic to expect the magnetic stripe to disappear and the chip to become standard in the interchange of card transactions."
Whenever the "inflection point," as Intel Corp. chairman Andrew Grove would put it, MasterCard is banking on the distribution capability it brought to Cirrus and later to the Maestro debit card program to carry Mondex past Visa Cash, the Belgian banks' Proton technology, and any other alternatives that may develop.
Mr. Mundt, responsible for Cirrus and Maestro and MasterMoney in his current role as head of global deposit access, said it is that very debit infrastructure that will carry the day.
He said the Maestro service, with Europay's support, outran Visa in the global on-line debit category because it could ride on Cirrus - which was built for on-line transfers with cardholders' personal identification numbers. Visa was handicapped, he said, by the fact that its Plus ATM network originally ran on credit card tracks, making the PIN-based debit approach difficult in many parts of the world.
It may have taken MasterCard longer to establish Maestro as a global product and brand, but consistency was key, and Mondex will follow that example. Visa Cash may have gotten a head start in smart card numbers, Mr. Mundt said, but it is actually a melange of separate, local programs.
MasterCard and Mondex showed their mettle, Mr. Mundt added, when Mr. Keegan went to an ATM in Guelph and loaded cash from a Natwest account onto his Mondex card.
"We want to build the infrastructure on the front end and learn from the past," the MasterCard executive said. "We like where we find ourselves now. Shame on us if we don't leverage that into a strong position."
Mr. Mundt, who was the third employee hired by Cirrus at its Illinois base in 1983, hasn't stopped thinking about ATMs. MasterCard wants to underscore their role in the "future of money" - also the theme of its advertising campaign.
MasterCard launched an effort in February to "redefine the ATM," building in capabilities to dispense stamps, travelers checks, phone cards, transit passes, and anything else the 150 million cardholders might find convenient for financial institutions to sell.
"The only limitation is the hardware," Mr. Mundt said. "Issuers seem to have an unquenchable appetite for delivering in-market services to consumers from out-of-market."
