News

Retailer Target drops smart chips from loyalty program

June 20, 2004

DETROIT, Mich. -- The utility of smart-chip technology appears to be in question following an announcement by loyalty software provider, Catuity, that its product will be "phased out" by its chief customer, the Target Corporation.

Target has elected to dissolve smart-chip technology from its customer loyalty program over the next 12 months, ending the maiden voyage of the technology as a major retailer's tool on a U.S. nationwide scale, according to an article on ZDNet.com.

Michael Howe, president and chief executive officer of Catuity, said the company is disappointed by the news but is hopeful that it will continue to work with the Target in the future.

"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," Howe said in the article.

The technology was employed in July 2003 as a feature of the Target Visa card, giving customers the opportunity to access exclusive retail offers and savings through "Smart Coupons" redeemable via an in-home smart card reader or in-store kiosk.

Forrester Research, an independent technology research company, said smart cards have not reached their "critical mass" in the United States due to the costs of upgrading the infrastructure for the chip cards.

The company predicted that contactless payments will reduce cash-based transactions in retail environments over the next five years. However, they anticipate that radio-frequency chips instead of the smart chip technology will support the system.