Target Corp. has reached a deal with Visa to settle claims over a massive 2013 data breach that exposed 40 million debit and credit card accounts. Both companies confirmed the agreement Tuesday, but wouldn't put a dollar amount on it. A person familiar with the situation said Target has agreed to fund up to $67 million in pre-tax payments to Visa and the financial institutions that issued the cards.
Minneapolis-based Target said that the issuers of a majority of the cards that were compromised have entered into direct settlements with Target and Visa, giving the two companies the green light to make a larger deal.
“The costs of the settlement are already reflected in Target’s previously reported fiscal 2013 and 2014 results,” Target said in a statement to NBC News. The agreement comes three months after a proposed $19 million settlement between Target and Mastercard fell through as not enough banks accepted the deal.
"This agreement attempts to put this event behind us, and increase the industry’s focus on protecting against future compromises with new technologies," Visa said in a statement.
The breach of Target's computer systems compromised 40 million credit and debit card accounts, as well as the personal information — including names and addresses — of as many as 70 million people. The hackers have not been identified.
The incident pushed banks, retailers and card companies to speed the adoption of microchips in U.S. credit and debit cards. Chip cards are safer because, unlike magnetic strip cards that transfer a credit card number when they are swiped at a point-of-sale terminal, they use a one-time code that moves between the chip and the register. The result is a transfer of data that is useless to anyone except the parties involved. Chip cards are also nearly impossible to copy.
In the aftermath of the hack, Target overhauled some of its divisions that handle security and technology. The company has also been upgrading its cash registers so they can accept chip cards in its nearly 1,800 stores.
The breach was a major factor behind the resignation of its CEO Gregg Steinhafel last year.