What it means is anyone WITHOUT this card is going to wind up paying more. Mark my words - sales are going to suffer. Most of their customers do not have good enough credit to get this discount. Shoppers do not want GIMMICKS to save - just give us lowest prices possible to start with - no bells, whistles, coupons, rebates or hoops.
They tested this in two markets, using 5% and 3 % rewards with positive results with the 5 %. They told employees it will increase visits and loyalty. This will also save on credit card fees paid on other cards. The new cards are only good at Target. This will allow Target to lower credit requirements, so more people will qualify. The downside is that they won't generate revenue from purchases at other companies.