Louis-Noel Joly complicated his life when he came out of retirement three years ago, but today that decision has MasterCard partisans cheering.

Back then, at age 59, the veteran French banker accepted an offer to become director and chief executive officer of Europay International, an affiliate of MasterCard International whose billing as a "strategic partner" was perhaps somewhat exaggerated.

Mr. Joly and his MasterCard counterparts-then H. Eugene Lockhart, now Robert W. Selander-tend to portray themselves more as pragmatists than miracle workers. But somehow they gave partnership a meaning that eluded predecessors, whose occasional but at times public squabbling threatened to leave MasterCard's European image under a permanent cloud.

Europay now claims that six out of every 10 new cards in its territory are issued under its-and by extension MasterCard's-umbrella. "We are a fantastic success story," Mr. Joly boasted recently.

"Working as a team we discovered that many of the problems we had could be solved quickly," he said. "Now we are not creating problems but solving them."

"We have done the deals we needed to get done," Mr. Selander said after settling in as MasterCard president in Purchase, N.Y., last year. "Now we can focus on implementation and execution and results."

In other words, the two entities overcame history.

As Mr. Joly knew too well from his days as a top executive at Societe Generale and a founder of the French banks' card-operations utility Cartes Bancaires, European outlooks on the credit and debit business did not always translate well at card association headquarters across the Atlantic.

He said he experienced that as a Visa-issuing banker in Paris. When he officially took the Europay helm in Waterloo, Belgium, in June 1996, relations with MasterCard were typically frayed.

Within weeks Mr. Joly and MasterCard's Mr. Lockhart were announcing agreements in principle and proclaiming a newfound united front. If not for the era of good feelings that followed, MasterCard and its affiliated brands might have lost any hope of contending with Visa's European Union and Central Europe organizations.

Visa is formidable and the competition relentless, Mr. Joly conceded in a recent interview. And by the traditional measures of card-market activity that Visa would prefer to emphasize, Visa's lead in Europe over MasterCard and the related Eurocard brand appears as insurmountable as its lead in the United States.

Visa officials say they rule the continent because Europay's victories are narrow or hollow, its statistics inflated by a "legacy system," the Eurocheque check guarantee cards.

But Europay, taking a holistic view of credit and debit markets that regards Eurocheque as a strong foundation and gives more weight to its advantages on the debit side, has won some impressive battles. Pushing the debit lever, meaning the Maestro brand, Mr. Joly said, Europay has boosted its share of Spanish cards to 38% from 5% in two years. He predicts the card total in Spain will rise as high as 14 million by yearend, from 10 million in the first quarter, with the initial debit inroads carrying over to credit cards.

Europay recently passed a 50% market share in Italy, he said, and almost weekly the association is announcing some kind of commitment by banks in emerging markets to the east.

As in the United States, credit card markets are maturing and slow- growing in some parts of Europe, but debit cards and Eastern Europe are very different stories.

Mr. Joly is also high on the long-term prospects of Mondex. The MasterCard-controlled smart card venture may have to lean on that support as it struggles to overcome European resistance.

"The big boom is in the debit market," Mr. Joly said. The decision stemming from the Joly-Lockhart accords to rally under the Maestro banner- it culminated last year in the establishment of Maestro International in Waterloo, headed by former Europay executive Francis van den Bosch- "rectified the weakness in the product."

"That is a big strength of the MasterCard-Europay family," Mr. Joly said.

Of Europay banks' 190 million current cards, a number roughly equivalent to MasterCard's in the United States, 15 million are in the emerging countries. Mr. Joly said they constituted about one-fourth of Europay card growth in his two years on the job, and he expects the total will nearly double each year for three to five years. "Five years from now," he said, "the Eastern countries could be 30% to 50% of our business."

Europay is not likely ever to drive Visa from the continent, but by keeping political distractions to a minimum Europay and MasterCard seem more focused than ever on shared goals. MasterCard benefits because Europay is pacing the system's international growth.

MasterCard reported rises of 11% in cards last year, to 341 million worldwide, and 14% in volume, to $602 million. Europay said its card total was up 19%, to 178 million at yearend. Eurocard-MasterCard volume was up 23%, to about $136 billion. While debit-card brands jumped 19%, the sales volume rose only 11%.

"We are a family," Mr. Joly said. "Everybody understands that life consists of problems and solutions. The last two years' results show we are in the right spirit."

Spirit has never been a problem within headquarters in Waterloo. From the formation of Europay in 1992 with the merger of the multinational Eurocard and Eurocheque cooperatives, executives exuded a self-confidence that could at times unnerve people at MasterCard. Despite its 12% ownership stake in Europay, MasterCard failed, from the Waterloo zealots' perspective, to fully appreciate their contributions to the global cause.

But in a real sense Europay in its first four years was a start-up, with some of the dysfunctions that can accompany entrepreneurial energy. CEO Ron H. Williams, formerly of National Westminster Bank in London, was a hard- charging field general who was regarded as ideal for the early stages but lacking the conciliatory qualities that attracted Europay directors to Mr. Joly.

Since Mr. Williams' formal farewell two years ago at a Europay conference in Seville, Spain, the Europay staff has expanded by just 10%, to 471.

"We have economies of scale," Mr. Joly said. "Any business growing more than 20% a year is very nice to be in. We are in a very interesting and challenging domain," which does not hurt morale.

The senior management cast has changed. Mr. Joly has 14 direct reports. Mark van Wauwe, secretary general, dates back to the old Eurocheque organization, but others are more recent recruits and promotions. These include Erich Weber, general manager of information technology; Javier Perez, general manager overseeing the sub-regions; John Stuart, deputy general manager of communications; Dag Fjortoft, deputy general manager, products and services; and Marc Dutrieux, senior manager, chip program management.

Personalities have done much to define Europay and its interplay with MasterCard. Mr. Williams was said to have never gotten along well with Mr. Lockhart; they were previously arch-competitors in London, where Mr. Lockhart had been a top executive at Midland Bank.

Mr. Williams also could not abide the Mondex approach to electronic cash, arguing vehemently at the Seville meeting that Mondex-then drawing close to its acquisition by MasterCard under Mr. Lockhart's stewardship- would never satisfy official European concerns about monetary control and cardholder anonymity.

With Mr. Joly's taking of the reins after Seville, the climate changed. The next biennial meeting, next month in Cannes, France, will be a showcase of what happened since.

Mr. Joly and Mr. Lockhart renegotiated an old cooperation agreement to include service- and system-quality commitments and a redesign of the Eurocard logo to give MasterCard more prominence. Europay formally bought in to the MasterCard product range, including Maestro and Cirrus for automated teller machines. In a major coup for Maestro, 60 million edc and Eurocheque cards in Germany are being converted.

Mark Sievewright, formerly of Europay and now president of PSIGlobal in Tampa, said the streamlining of brands is where Europay's strength and progress are most obvious to the outside world.

"It reflects an understanding of the value of the Europay organization while recognizing that the world is going global," he said. "The MasterCard structure must reflect that with its regional partners."

"It is most important for all of us to deliver a global system," Mr. Joly said. "We are all in the same boat."

If anything, that sentiment has gotten stronger in the year and a quarter since Mr. Lockhart left MasterCard for his abbreviated stint as head of global retail banking at BankAmerica Corp. His successor at MasterCard, Mr. Selander, played a key role in the rapprochement and developed a friendship with Mr. Joly.

Especially in view of earlier sensitivities, "it is important that the heads of these companies get along well," Mr. Sievewright said.

"When two businesses are working well together, it is a lot easier to get along personally," Mr. Selander said.

"Bob and I have a close collaboration in the spirit of partnership," Mr. Joly said.

He said it carries over into the periodic management meetings of the two companies: "They are open, honest, to the point, and we don't waste time."

Mr. Sievewright said he has observed much friendlier interactions between the staffs, particularly in technology.

He said the cross-pollination sends positive signals, with Mr. van den Bosch taking charge of Maestro International in Waterloo and Richard Phillimore, also formerly of Europay, overseeing MasterCard chip strategy from Purchase.

As befits a French banker, Mr. Joly embraces smart cards and said he is proud that Europe and Europay are more ready for them than the rest of the world. He called Mondex and the associated Multos operating system "an important development for our partnership and the industry," which pits him against the Visa camp and its devotion to the Java programming system.

He predicted "an important breakthrough" in Europe next year. Aside from the United Kingdom, where Mondex was invented, its first European franchise was announced only this week-in Norway.

Invoking his engineering and computer-technology background-Mr. Joly earned a master of science degree from the University of California at Berkeley-he said Java is not well suited for the constraints of card-size chips and "may not be the right way to go."

Of the United States' resistance to smart cards, he said, "It is a very modern country, but in some ways old and conservative."

Now 62, Mr. Joly said he is taking a year at a time and not contemplating retirement before 2000.

"I have to stay at least through Dec. 31, 1999," he said, referring to the year-2000 calendar change that will challenge any computer-dependent organization.

"I am pretty sure it will be a nonevent for us-if our partners like the telecom companies don't fail," Mr. Joly said. "If it is a nonevent, I want to be there and drink a bottle of champagne with my technical people."

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