When he joined MasterCard 15 months ago, U.S. region president Alan J. Heuer had no inkling that another part of the world would become one of his problems.

But when he "went around talking to people," Mr. Heuer recalled, he "consistently heard one thing: Fix Europe."

That may not have been in his job description, but it made him an avid supporter of the campaign top MasterCard executives brought to a climax last month by signing a comprehensive alliance with their European marketing partner, Europay International.

"Fix Europe" meant MasterCard's world had gotten smaller. The shortcomings in its global brand identity hit the U.S. chief executive where he lived, in the world's most advanced credit card market.

"The MasterCard brand was not as visible," Mr. Heuer said of Europe, "and acceptance not as strong" as in the United States.

U.S. banks' customers were returning from Europe with complaints that they could not use their MasterCards or were discouraged from using them.

Worse, this came at a time when U.S. card issuers like MBNA Corp. and Advanta Corp. - companies represented on the MasterCard board - were staking out positions in Europe.

Flash forward to the summer of 1996, and top MasterCard executives can't stop crowing about the agreement they announced last month with Belgium- based Europay.

They said the deal would bolster the "global acceptance brand," ensuring more prominence for MasterCard's logo throughout Europe.

The 10-year, renewable agreement also holds Europay accountable for measurable improvements in transaction speeds and service quality, and it will provide a model for other parts of the world where MasterCard will seek to shore up the brand and ensure transactions are handled as smoothly as U.S. cardholders expect.

The fix-it cry was a wakeup call for Mr. Heuer, whose consumer banking experiences at Bank of New York and Marine Midland Bank couldn't have been more American. But it had been resounding through MasterCard International Inc. at least since the arrival in March 1994 of H. Eugene Lockhart as president and chief executive officer.

Mr. Lockhart said recently that he had been "on this from Day One" but that the problem had been festering far longer.

A 1988 agreement between MasterCard and Eurocard, a predecessor of the four-year-old Europay association, was "supposed to make MasterCard the most recognized brand in Europe," Mr. Lockhart said.

"It didn't happen," he said, and MasterCard found itself fighting uphill against what Mr. Lockhart called "single brands" - American Express, Diners Club, Visa.

Through ensuing years, and except for a growth spurt from cobranding programs with industrial companies like AT&T and General Motors, MasterCard had continually lost market share to Visa, which took care of most branding complications in the 1970s by adopting a single identity.

Only a month and a half ago did MasterCard eliminate one of the last vestiges of its historical, regional divisions. Its major British issuers finally agreed to drop the "Access" trademark that occupied space on all seven million of their MasterCards.

That move was crucial because Britain is a leading destination for MasterCard holders, both from Europe and North America. But it did not "fix Europe," where various country organizations within Europay held sway.

"I worked in Europe as a banker for seven years," said Mr. Lockhart, recalling his tenure through 1992 as a senior executive at Midland Bank in London. "I was a MasterCard board member as a European. I knew exactly what was going on."

He knew it could take 20 minutes to get a MasterCard authorization in parts of Europe and that many cardholders were unwilling to wait so long.

He knew Cirrus automated teller machine cards were often unusable.

He knew about "too many layers of technology," "deficient education of merchants" as to card acceptance, and "no end-to-end operating standards" to ensure service levels like those of competitors.

For documentation, MasterCard hired a consultant in 1994 to photograph card decals and test card usage at thousands of European retail sites. "The results were not good," Mr. Lockhart said.

Now that the Europay deal is sealed - Mr. Heuer called it "truly a big plus, it has taken a significant issue off the table" - Mr. Lockhart candidly laid out how it got done.

When he took on MasterCard's top job, he said in a recent interview at his Purchase, N.Y., headquarters, "Objective No. 1 was to get an agreement to improve acceptance. It wasn't going to be pleasant, but it had to be done."

Mr. Lockhart was alluding to tensions between MasterCard and Europay that he said stood in the way of a fruitful partnership.

He said Europay had grown into a "superstructure" that became more concerned with "self-preservation and sovereignty" than with enforcing an old partnership agreement with no teeth. MasterCard's 12% equity position in Europay didn't buy much influence.

Meanwhile, Mr. Lockhart and his team ran up against Ron H. Williams, Europay's imperious chief executive officer, who retired in June.

"Give Ron Williams his due," Mr. Lockhart said. "He created a company that didn't exist before," uniting people and groups "who aren't always congenial. He did the product integration" of the Eurocard and Eurocheque families under one structure "and had excellent communications and packaging of materials."

But Mr. Lockhart blamed the Williams administration for blocking progress toward global acceptance and intersystem efficiencies.

"Underneath the covers of partnership, things were broken," Mr. Lockhart said.

This spring - even after a year of what Mr. Lockhart termed "tortuous negotiations" that produced basic agreements, which had been passed to the staff level for refining - the MasterCard CEO was again frustrated and "ready to pull the plug."

"I have no doubt that, people being people, there was fault on both sides," Mr. Lockhart said. "But we had to get back to the basic objective of improved acceptance."

If Europay were going to obstruct, Mr. Lockhart would issue an ultimatum. Reluctantly, he said, he would bypass Europay with an acceptance network made up of sizable MasterCard banks.

"I communicated I was fed up, and that probably led to some of the comments made about us in Seville," he said, referring to the site of Europay's convention in Spain in early June. Making his farewell appearance there, Mr. Williams said little about MasterCard - he did praise Mr. Lockhart's predecessor - but some of his senior people pointedly criticized MasterCard for wanting to impose order on European payment brands.

Christopher D. Thom, MasterCard's executive vice president for franchise management, suffered those barbs in Seville as head of the MasterCard staff delegation. Mr. Thom, formerly of Midland Bank, said he was restlessly nearing the end of a year trying to be "conciliator for a relationship that was difficult."

But within weeks, he said, "Europay and the Europay members fully bought into a process ... that moves us toward a global brand. That's extremely good news."

Mr. Williams' departure after the Seville conference certainly helped Mr. Lockhart, Mr. Thom, MasterCard's top European executive Robert Selander, and the new Europay chief executive Louis-Noel Joly to get the discussions back on track in time for their international board meeting in London at the end of June.

Mr. Lockhart had decided that would be the time to "fish or cut bait."

The agreement came together. Mr. Lockhart won acceptance of what he calls "rules of the road," including global brand consolidation, operating and marketing standards, a unified rules structure, and a balancing of power between credit-dominant entities like MasterCard U.S. and more debit- oriented ones like Europay.

"The deal is good for both parties," Mr. Lockhart said. "MasterCard gets quality, end-to-end standards. Europay gets participation in a global system and a path to a greater voice in the enterprise.

"Working with the biggest banks and the best network in Europe, we can have the best acceptance network in Europe," he said - assuming Mr. Thom and other key marketing and technology people on both sides successfully carry out the game plan.

Their efforts to this point were symbolized by a new credit card logo for Europe that will include the Eurocard name but display it noticeably less prominently than MasterCard. The MasterCard image itself is being emboldened and "refreshed" - the company is putting finishing touches on the design before starting a two- to three-year global conversion.

As if on cue, Europay announced at the end of July that it had won away from Visa the allegiance of the Spanish Savings Banks Association. The members expect to issue six million MasterCard (credit), Maestro (debit), and Clip (electronic purse) cards within two years.

Europay's Mr. Joly said the banks had been drawn to his association's "comprehensive range of products and services."

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