Target Plans to Offer ‘Smart’ Credit Cards

Target Corp., the third-largest U.S. discount retailer, said it will become the first store in the country to offer its customers credit cards with computer chips.

Target, in an alliance with Visa USA, will issue the “smart” cards through its subsidiary, Retailers National Bank, later this year. The company will install special terminals that can read information off the chip in all 990 Target stores next year. Customers will be able to use the cards, which also will have the conventional magnetic stripe, anywhere Visa is accepted.

Smart cards, prevalent in many European countries, can be made to store identification and health information, track customer loyalty, and help prevent fraud. Visa, MasterCard International Inc., and American Express Co., which make money each time a card is used, have struggled to get U.S. consumers and merchants to embrace them.

Target would become the fifth major U.S. issuer of smart cards, joining American Express and Visa members FleetBoston Financial Corp., Providian Financial Corp., and First USA Inc. The other four issuers have primarily promoted online uses for their cards.

Target shares fell 6 cents to close at $36.27 on the NYSE.