NEW YORK (Bloomberg) - Target Corp., the second-largest US discount chain, will stop issuing Visa Inc. credit cards to new applicants and spur use of its own plastic.

"Guests tend to spend more at Target when issued a Target Credit Card instead of a Target Visa," the Minneapolis-based company said yesterday in a statement.

The decision may pull revenue from San Francisco-based Visa, the world's biggest payments network. Last month, Macy's Inc. said American Express Co., based in New York, would replace Visa as the processor for Macy's and Bloomingdale's credit cards. Visa Inc. spokesman Will Valentine did not immediately return an e-mail seeking comment.

New qualified applicants will receive the proprietary Target Credit Card, a product that may be used only at Target stores and Target.com, the retailer said. Existing Target Visa cardholders will not be affected.

Target is the third-biggest issuer of Visa credit cards, with 23.9 million cards outstanding, and the 15th-biggest issuer overall by purchases, according to the Nilson Report, an industry newsletter based in Carpinteria, California.

Any drag on Visa's profit will be limited as Target credit cards accounted for about one percent of payments Visa processed in the US last year, according to analysts, including Tien-tsin Huang at JPMorgan Chase & Co.

"This is a rather benign announcement," Mr. Huang said yesterday in a note to clients.

About 70 percent of Target's credit-card customers hold Visa-branded cards and account for about 95 percent of outstanding loans, which likely will decline as all new accounts move to Target-only cards, said spokesman Eric Hausman.

Target test-marketed the two products since October at some of its 1,740 US stores before concluding that customers using the proprietary credit card shopped more frequently and spent more, Mr. Hausman said.

"We think it's going to be a sales driver for us," he said.

Target was considering the switch to store-only credit cards as it separately tested rewards programs in select markets, including one in Kansas City, Missouri that offered customers as much as five percent off every item, every day. The company has not yet decided whether to expand either of those programmes, Mr. Hausman said. Wal-Mart Stores Inc. is the world's biggest retailer.