Proclaiming an end to their recent squabbling, MasterCard and its affiliate Europay International have agreed to a 10-year pact that promises MasterCard the name recognition it has long sought in Europe.
As part of what they termed a "renewed understanding and commitment," the associations adopted a logotype design for Europe that will include the names of both MasterCard and Eurocard, which is Europay's credit card brand.
The deal, described Wednesday as an agreement in principle that "will be formalized in September," pacifies a militant faction within the European membership that had insisted on "Euro" being a prefix to all product names. A series of related disputes over branding strategy and European governance had given heart to competitor Visa International.
Negotiators were able to compromise on coexistence of the regional and international service marks: Eurocard will be printed above MasterCard, still in its familiar interlocking circles, on a field of blue.
Each side hailed the agreement on a single look. Similar accords on debit and stored-value card designs could come within six months, said MasterCard International president H. Eugene Lockhart. For example, the Eurocheque name would have to reconciled with MasterCard's Maestro and Cirrus.
Mr. Lockhart emphasized the agreement's importance for U.S. banks, in that they can assure cardholders of "a better recognized brand" when traveling in Europe.
What's more, MasterCard and Europay said logo consistency is only the outward manifestation of a "long-term alliance" - renewable after the 10- year term - that will extend to service, quality, and marketing standards MasterCard has been pushing for in all regions.
The Europay agreement, Mr. Lockhart said, would be a "template" for cooperation with MasterCard organizations in other parts of the world. It will become easier for MasterCard to upgrade its products and operating standards quickly, efficiently, and globally, he said, affecting anything from authorization response times to technology enhancements.
"We are, in effect, franchising the use of our brand to Europay for marketing and acceptance," Mr. Lockhart said in an interview. "From Europay we receive measurable commitments on the marketing and performance side."
The "renegotiation of Europay's relationship to MasterCard," as Mr. Lockhart described it, will help MasterCard become "the premier acceptance mark in Europe. We hope and expect that the strength this gives us in Europe, coupled with a tighter, professional partnership with Europay, will increase MasterCard usage in Europe."
"We must continually adapt to remain competitive," said Louis-Noel Joly, chief executive of Europay International in Waterloo, Belgium. "This agreement helps us do that by building on the evolving strengths of both companies."
The comments by Mr. Lockhart and Mr. Joly indicate their historically precarious partnership has found a harmony that had eluded it for at least two years. That's about as long as Mr. Lockhart has been in office. Mr. Joly, a former senior executive of Societe Generale in France, moved into the top Europay post last month when Ron H. Williams retired.
A strained relationship between Mr. Lockhart and Mr. Williams carried over to their corporations. It was a major topic of conversation during Europay's biannual convention early in June in Seville, Spain, where several officials of Europay, which is part-owned by MasterCard, publicly defended their adherence to a multiplicity of brand names.
Mr. Lockhart acknowledged that Mr. Williams' departure had eased completion of the alliance, which he and his former board chairman, Boatmen's Bancshares executive Norman Tice, began discussing with Europay leaders in late 1994.
"The discussions weren't easy," Mr. Lockhart said. "There was a lot of to-ing and fro-ing" that finally moved toward a conclusion at about the time of the Seville meeting. "After Seville, Mr. Joly and I brought it to a conclusion."
Saying an agreement was long overdue to replace one that had been signed in 1988 by MasterCard and Eurocard International - a predecessor of Europay - Mr. Lockhart said his top European executive, Robert Selander, and executive vice president Christopher Thom played key roles in the negotiations.
He also praised Mr. Joly for his professionalism, integrity, and "balanced, mature perspective."
Mr. Joly said managing the partnership will be a "challenge .... My belief that this alliance will work on a long-term basis is founded on the confidence I have in the people involved."