MasterCard's sentimental advertising campaign featuring the line, "There are some things that money can't buy -- for everything else there's MasterCard," has been successful enough to roll out in 30 countries.

Earlier this year, MasterCard scored a coup when Citigroup Inc., the world's largest credit-card issuer, agreed to transfer as much of its business as possible from Visa USA Inc. And, hoping that other big issuers will do likewise, Selander, MasterCard's chief executive, has set a personal goal of boosting MasterCard's share of the US card market by at least 10 percentage points within three to five years, up from 25 per cent at the endof 1998.

But nothing can disguise the fact that MasterCard still has massive hurdles ahead. Despite a management restructuring and change of direction since Selander took over two years ago, the credit-cardassociation is expected to stay a distant second to Visa in the war for plastic payments.

And Visa has already staked out a much stronger presence than MasterCard in the brave new world of electronic commerce. (Visa and MasterCard are associations jointly owned and funded by the thousands of financial institutions that issue cards on their networks.) Indeed, the Citigroup deal was viewed by many in the industry as little short of a lifeline after years in which MasterCard's presence has waned.

"Over the last two decades, the two associations have tried to match each other product for product in the US and overseas, and I think MasterCard decided it lost the war," says David Robertson, president of the Nilson Report, an industry newsletter. "Visa will continue to be the 800-pound gorilla as far as the eye can see."

MasterCard was bigger than Visa until the late 1970s and has been losing out to its rival ever since. Now, according to the Nilson Report, Visa's market share stands at roughly 51 per cent,about-double MasterCard's. Also, Visa officials say, Visa's preference ratings among customers--a leading indicator of card use--suggest that Visa's market share will continue to grow.

Selander, 48 years old, contends that MasterCard's recent reshaping which included slashing the size of its board to 17 members from 31 members, centralizing decision-making at headquarters and forming a staff dedicated to serving big issuers globally, is evidence of a new direction designed to gain market share.

Noting that 95 per cent of card payments come from 20 countries, and that 70 card issuers account for 700 of MasterCard's business, Selander says, "We are going to focus on those key customers in those key markets."

The policy is designed to give MasterCard an edge in the rapidly consolidating world of credit-card issuers, which is increasingly dominated by a handful of global giants. But it has already generated anxiety among the thousands of small-bank issuers that have long been MasterCard's mainstay. "Thereis a concern that, with Citigroup now with MasterCard, MasterCard becomes less friendly towards small institutions," says Kenneth Guenther, executive vice-president of the Independent Community Bankers of America.

And while MasterCard's new strategy of centralized decision making may help the few companies that issue cards around the world, it could ironically hinder international expansion by reducing the authority of its regional boards, some observers say.

Visa, by contrast, plans to increase power at its six regional boards world-wide -- a tactic designed to boost card use in an area where Visa is already rapidly expanding.

"We are putting decision making as close to the customer as we can put it," says Michael A. Beindorff, Visa's USA executive vice-president, marketing and product management. "The real power of Visa lies at the regionallevel."

Selander argues that the new focus on large issuers "doesn't mean you ignore everybody else" and that every member will benefit from a new trend in howmembers pay that has been accelerating at MasterCard under his leadership.In future, MasterCard's members will contribute more on a "pay-as-you-go" basis, in which they will pay for additional services from MasterCard, such as back-up computer systems or special marketing initiatives, which will reduce the portion of payments based purely on card volume.

The trend could appeal to large issuers that have become increasingly disgruntled at contributing vast sums, which are used to benefit all issuers. So could MasterCard's willingness to be more flexible on branding cards. A chief reason for Citigroup's switch was that MasterCard appeared more willing to allow members to push their own brand names, most obviously by relegating the association's logo to the back of a credit card.

MasterCard's board has yet to vote to allow that, but Selander predicts that will come before long.

Amid all these changes, Visa has hardly been asleep at the wheel. Since 1996 it has reduced the size of its US board to 14 from26, in part to make it more responsive to issuers' needs. It was already considering allowing the relegation of the logo to the back of the card when Citigroup switched, though that proposal has since been put on a back burner. And, in March, Visa named Bond Isaacson, an executive at International Business Machines Corp., to fill the newly created position of executive vice-president of member and merchant relations, a move widely seen as placing a greater emphasis on keeping members happy. So far, no other big banks have signaled their intention to abandon Visa.

But Selander says MasterCard's strategy will soon bear fruit. "Do I think in the next year or two that we're going to be bigger than these guys? No," he says. "Do I think we're going to be growing faster and gaining share? Absolutely."

The Asian Wall Street Journal