Target announced that it is about to finalize a deal with MasterCard that will reimburse banks around USD 19 million for expenses related to the former's massive security breach that compromised millions of credit card accounts.
It may be recalled that two years back, Target admitted to at least compromising 40 million credit card records due to a data breach during the peak of a holiday season. It was believed that the cyberattack endangered up to 110 million people by exposing their personal credentials like phone numbers and addresses. In a statement Esset Koyal Group Capital Management got, the cost of the settlement -- resulting from months of negotiations -- covers bank expenses associated with reissuing cards to affected customers.
MasterCard negotiated on behalf of their partner banks that have to deal with Target's security breach, with JP Morgan, Capital One and Citigroup among the biggest issuers. Their deal with Target is based on the presumption that 90% of the account holders would eventually accept their settlement offer.
Target and MasterCard expects that victims of the security breach will accept the agreement. MasterCard has issued a statement saying, "We believe this settlement provides our issuers a reasonable resolution of the Target data breach event. The timely reimbursement of costs and losses under the agreement delivers MasterCard issuers a faster and more certain resolution to the event, while reinforcing our commitment to maintain the integrity of industry security standards."
Esset Koyal Group Capital Management disclosed that in Target's financial filing, USD 252 million was the cost associated with the data breach. Their settlement seems to highlight yet another example of how expensive it is to do damage-control after a huge security breach.
The Target breach, which compromised around 40 million card credentials have been particularly worrying for the public as it happened during a shopping season. And further complicating matters in the settlement negotiations are the succeeding data breaches involving large names such as Home Depot.
The series of high-profile breach also resulted in demands for merchants to accept only those cards that have an embedded chip that makes it less vulnerable to illegal replication. Since then, Target has taken steps to update its terminals in accordance with the newer, more secure ones issued by banks.
Meanwhile, the retailer is still conducting a separate negotiation with Visa-supported cards.