The second largest discount chain of stores in the United States, Target, has decided to curb the issuance of Visa incorporated credit cards and instead promotes its own card to new applicants.
The company, which has its head quarters in Minneapolis, said that there is a tendency that the guests might spend more through Target credit card as compared to the Target Visa card.
The decision will adversely affect the world's largest payment network, Visa, which is currently located in San Francisco. In the month of March, Macy's Incorporation made an announcement that said that the visa cards being used by them currently will make way for the credit cards from American Express Corporation that is currently based out of New York.
The retailer, Target, went on to mention that the new applicants who qualify for credit cards will be provided the Target card that can be used online on their website Target.com, in addition to all the Target stores. The current consumers who hold Target visa card will not be impacted adversely.
The Nilson report, which is a newsletter related to the credit card industry, having its head quarters in New York mentioned that Target is the third largest company that issues visa credit cards to consumers. With an outstanding of over 23.9 million cards, Target is the third largest card issuing company in terms of purchases.
The financial analysts add that any increase in the profits of Visa will be stalled at the moment since Target accounts for nearly 1% of the total profits through Visa payment processing.
Tien-tsin Huang from JP Morgan Chase, who sent out a note to all consumers, said that this was a benign announcement.
Eric Hausman, the spokesperson for Target, said that about 70% of Target consumers have Visa credit cards and they account for over 95% of the total outstanding loans. This figure is all set to decline with Target making this huge change.
Denise Dunckel, the spokesperson for Visa, issued an email statement which said, "We respect Target's business decision to move ahead promoting their proprietary cards. We look forward to working with Target to provide existing Visa Target cardholders with the value they have come to enjoy."
As a test run, Target marketed two of its credit cards in the month of October, 2009. The campaign that was conducted in the 1,740 Target stores in the United States clearly showed that the consumers who held Target cards ended up spending more shopping that the consumers who held Target Visa cards.