The amount under the settlement with MasterCard Inc covers costs that banks incurred to reissue credit cards and debit cards to customers as a result of the breach, Target said in a statement on Wednesday.
In 2013, Target said at least 40 million credit cards were compromised by the breach during the holiday shopping season, and the attack might have resulted in the theft of personal information, such as email addresses and telephone numbers, from as many as 110 million people.
The payments will be made by the end of the second quarter and is conditioned on issuers of at least 90 percent of eligible account holders accepting the offer by May 20, Target said.
The company added that the estimated cost of the settlement was already reflected in the liabilities established in fiscal 2013 and 2014.
The settlement does not include financial institutions that issue Visa-branded cards. Target is negotiating separately with Visa Inc , a Target spokesman said.
Target's shares were up less than a percent at $82.71 in trading after the bell on Wednesday.
© Thomson Reuters 2015