Clothing and general merchandise retailers that issue private-label credit cards are beginning to make vigorous use of the Internet to increase customer loyalty, to both the cards and stores.

Some retailers may be on the verge of branching out into more complicated services that could create a cobranded credit card combining two noncompeting retailers on one card. The Internet will help it all happen, say vendors and analysts.

Target Corp. made banking headlines recently with its announcement that it would issue smart credit cards this year to some of its 18 million cardholders. First on the menu for the new chip card would be Internet services such as downloading from a Web site loyalty points or coupons that could presumably then be used in the store, or perhaps acquiring points at the store for use on the Internet, as stores begin to install chip card-reading terminals in 2002.

Sears Roebuck & Co. has announced that it will revamp its Web site to include a more comprehensive area for credit card services to its 60 million cardholders. In addition to the bill payment and presentment that are becoming common at retailer sites, Sears promises some special, customer-friendly innovations. One such convenience may be that Sears customers will be able to obtain electronic copies of receipts for their in-store purchases.

Ronald F. Elmore, a vice president of financial and security services for Gemplus North America, the chip card supplier to Target, said other retailers have shown more interest in chip cards for Internet use since the Target announcement.

"Clearly the major retailers, especially those who issue private-label credit cards, are looking for two major objectives," he said. "One is the retention of cardholders, and the other is increase of utilization."

Whether retailers put chips on their store cards or not, they are looking to the Internet to increase customer use of the cards. One vendor who is supplying software to Sears says there is more than one way to tackle the chore.

Dan Cone, the senior vice president for business development at Incurrent Solutions Inc. of Parsippany, N.J., is developing the Sears cardholder Web site, as well as sites for other retail card issuers. He said retailers will increasingly use bank card-type services to increase customer use of their cards.

"Card members will have access to bill presentment and payment and reviews of previous transaction history," Mr. Cone said. Customers will be able to sign up for e-mail alerts from Sears when a statement due date is approaching or the available credit is dwindling. Sears will make these typical bank card features more appealing by offering customers online copies of their store receipts, he said. A Sears spokesman declined to comment on its Web site, which is to be unveiled this month.

Retailers are interested in letting customers use and monitor gift cards and loyalty points online, said Paul Daffin, the director of product development for DotsConnect, a subsidiary of TSYS of Atlanta that is developing online capabilities for retailers such as Target and Nordstrom Inc. "You will start to see more implementations of being able to use those points online," such as the capability Target has planned, he said.

TSYS client Circuit City Stores Inc. offers a private-label credit card and plans to let customers check balances and look up old statements at its Web site. "I would say that retailers and financial institutions are both intent on making their sites as compelling as possible by providing as much value-added content as is possible," said Michael P. Scyphers, the director of information systems at Circuit City. He said the company expects to add functions for credit applications and managing credit accounts to the Web site.

Adding online services to make the credit card more convenient will encourage customers to use the card at the store, too, Mr. Scyphers predicted. "Anything that is done to strengthen the relationship with the customer is advantageous for both the retailer and the consumer."

The more stimuluses a retailer can find to bring cardholders to its Web site, the better, consultants say. Kenneth Clemmer, a senior analyst at Forrester Research Inc. in Cambridge, Mass., explained, "If you think of how hard it is to deal with people who are late with payments, the labor intensiveness of processing paper checks, and the time from when you receive the check in the mail and the time you get the funds, as opposed to the time if you draw [directly] from a checking account, there is plenty of reason for any credit card issuer to get customers to pay their bill electronically."

Features like online receipts give customers more reasons to come to the Web site and the store, Mr. Clemmer said. "If I want to keep track of where I spend money, I know if I spend it there I can get a receipt later," he said. "They are taking information they have and exposing it to the customer."

Mr. Clemmer's research has found that most newcomers to online bill payment opt to pay at biller sites rather than bank sites, giving retailers another reason to pursue the online strategy.

Retail analyst Michael Exstein of Credit Suisse First Boston in New York predicted that Sears will eventually form partnerships with other retailers to make the Sears store card useful in other chain stores. Customers will also be able to get cash advances by using the cards, Mr. Exstein predicted.

"They have this great financial product in operation," he said, "the question is, how do you leverage them better? It is part of a much larger corporate move right now."

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