Target has agreed to pay $39.4 million as settlement to resolve claims made by credit unions and banks over a data breach that occurred in late 2013.

In mid-December 2013, Target confirmed that about 40 million debit and credit card accounts may have been impacted between Nov. 27 and Dec. 15, 2013, when customers made payments via their cards in one the retailers' 1,797 brick-and-mortar stores.

Target promptly addressed and fixed the issue and then issued an apology statement to customers.

"Target's first priority is preserving the trust of our guests and we have moved swiftly to address this issue, so guests can shop with confidence. We regret any inconvenience this may cause," said Gregg Steinhafel, the former chairman, president and chief executive officer, Target. "We take this matter very seriously and are working with law enforcement to bring those responsible to justice."

Steinhafel resigned from his post after the entire data breach snafu.

Fixing the problem and issuing an apology statement was not enough for Target as credit unions and banks had also filed a case against the retailer, which has now been resolved.

According to the lawsuit, lenders held Target responsible for the costs they incurred for reissuing debit and credit cards, and also for reimbursing fraudulent charges on the cards that resulted due to the data breach.

Per the latest settlement, Target will have to pay $20.25 million to credit unions and banks, and $19.11 million to reimburse MasterCard Inc card issuers.

In April this year, Target reached upon a settlement with MasterCard, however, it was overruled as card issuers thought that the settlement amount was too low.

Trade groups on the behalf of credit unions and banks estimate that their members suffered over $200 million in expenses due to the data breach that occurred at Target in 2013.

"Financial institutions should not always have to bear the burden of extensive costs related to merchant data breaches over which they have no control," says Karl Cambronne and Charles Zimmerman, the plaintiffs' lawyers.

A Target spokeswoman Molly Snyder says that the company is happy that the settlement process is moving forward.

Photo: Mike Mozart | Flickr