Target Corp. announced plans to settle claims with Visa over its massive data breach in 2013, which exposed 40 million debit and credit card accounts. The retail giant could pay as much as $67 million in pre-tax payments to reimburse thousands of financial institutions for expenses incurred from the breach.
In addition to the agreement made with Visa, Target plans to strike a similar deal with MasterCard.
Although the terms of the deal between Target and Visa have not yet been disclosed, both parties confirmed that a settlement has, in fact, been reached. The Visa deal has also been accepted by major Visa issuers.
Visa said “this agreement attempts to put this event behind us” as it concentrates on the move toward more secure payments, according to the Wall Street Journal.
"Target is pleased that we have reached a settlement agreement with Visa related to the data breach we experienced during the fourth quarter of 2013," the retail giant said in a statement.
The settlement details have already been factored into Target's 2013 and 2014 results.
About three months ago, a proposed $19 million settlement between Target and MasterCard fell through after not enough banks and credit unions agreed to the terms. The settlement required the approval of 90 percent of banks representing cardholder accounts, but this fell short.
Unlike the MasterCard proposal, this Visa settlement will not require the approval of a certain percentage of financial institutions.
In addition to this deal with Visa, Target previously reached a $10 million settlement with customers under a federal class action suit, allowing some customers to get reimbursed up to $10,000 for losses, if they can provide the required documentation.
Following the data breach, Target has been working to bolster its security and technology divisions and also focused on upgrading its cash registers to accept card chips in 1,800 stores. The company is spending $100 million to ramp up security in its systems, including reissuing cards with chip technology.
Meanwhile, credit card issuers have also been speeding up the adoption of card chips on credit and debit cards to better protect consumers. Unlike magnetic strip cards that transfer a credit card number when swiped at a point-of-sale terminal, chip cards use a one-time code that moves between the chip and the register, providing a more secure transaction. Experts say chip cards are also nearly impossible to duplicate.
The breach, which was disclosed on Dec. 19, 2013, was a major driver behind the abrupt resignation of Target CEO Gregg Steinhafel last year.
In 2014, Target announced that costs related to the breach had reached $148 million.