n March 2, 2004, Target Corp. announced plans to phase out the use of smart card technology from its Target/Visa-branded card loyalty program over the next 12 months because of limited use.

Target's loyalty program, introduced several years ago, enabled consumers to download electronic coupons from the Internet onto the cards from their PCs (with the use of an attached reader) or from in-store kiosks. The coupons could then be used for savings on purchases made in Target stores.

Target was the first major U.S. retailer using smart card technology in a loyalty program capacity, and many in the payments industry were watching it closely-believing its success would determine whether or not smart card technology would be implemented by other major credit card issuers.

"In Target's case, it's not a smart card problem," said Aneace Haddad, President and CEO of Welcome Real Time, a provider of smart card software for payment transactions. "The problem is the marketing value proposition. It was just too cumbersome to search coupons online and then go to a kiosk.

"The vast majority of consumers just will not take the time to do this. We recommend presenting the card at the POS terminal and simply triggering loyalty points and surprise promotional offers directly at the POS at the moment of purchase."

Catuity, Inc. is the provider of the loyalty software for the Target/Visa smart card program.

"We are disappointed this specific program will not be going forward," said Michael V. Howe, President and CEO of Catuity. "Catuity is fortunate that our loyalty software supports a variety of consumer identification devices.

"While in this instance it was smart chip technology, the system works equally well for mag stripe, contactless, RFID or bar codes, and we are hopeful that we can continue to work with Target in the future."