It resolves claims by banks seeking to hold Target responsible for their costs to reimburse fraudulent charges and issuing new credit and debit cards because of the breach.
The Minneapolis-based company has said at least 40 million credit cards were compromised, and that as many as 110 million people may have had personal information, such as email addresses and phone numbers, stolen.
Notable data breaches:
Notable Data Breaches
Target in $39.4M settlement with banks over data breach
The Homeland Security Department headquarters in northwest Washington, Friday, June 5, 2015. China-based hackers are suspected once again of breaking into U.S. government computer networks, and the entire federal workforce could be at risk this time. The Department of Homeland Security said in a statement that data from the Office of Personnel Management _ the human resources department for the federal government _ and the Interior Department had been compromised. (AP Photo/Susan Walsh)
LONDON, ENGLAND - AUGUST 19: A detail of the Ashley Madison website on August 19, 2015 in London, England. Hackers who stole customer information from the cheating site AshleyMadison.com dumped 9.7 gigabytes of data to the dark web on Tuesday fulfilling a threat to release sensitive information including account details, log-ins and credit card details, if Avid Life Media, the owner of the website didn't take Ashley Madison.com offline permanently. (Photo by Carl Court/Getty Images)
FILE - In this Feb. 5, 2015 file photo, the Anthem logo hangs at the health insurer's corporate headquarters in Indianapolis. Insurers aren't required to encrypt consumers' data under a 1990s federal law that remains the foundation for health care privacy in the Internet age _ a striking omission in light of the cyberattack against Anthem, the nation's second-largest health insurer. (AP Photo/Michael Conroy, File)
Sony Pictures Entertainment headquarters in Culver City, Calif. on Tuesday, Dec. 2, 2014. The FBI has confirmed it is investigating a recent hacking attack at Sony Pictures Entertainment, which caused major internal computer problems at the film studio last week. (AP Photo/Nick Ut)
FILE - In this file photo made Oct. 6, 2009, employee John Abou Nasr pushes shopping carts in the parking lot of a Home Depot in Methuen, Mass. Home Depot's data breach could wind up being among the largest ever for a retailer, but that may not matter to its millions of customers. (AP Photo/Elise Amendola, File)
Shoppers arrive at a Target store in Los Angeles on Thursday, Dec. 19, 2013. Target says that about 40 million credit and debit card accounts may have been affected by a data breach that occurred just as the holiday shopping season shifted into high gear. (AP Photo/Damian Dovarganes)
Graphic shows details of recent notable data breaches by organization; 3c x 7 inches; 146 mm x 177 mm;
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Wednesday's settlement calls for Target to pay as much as $20.25 million directly to banks, and $19.11 million to fund a MasterCard Inc. program related to the breach.
The accord covers all banks that issued payment cards put at risk by the breach, and which did not previously release their claims against Target.
Molly Snyder, a Target spokeswoman, said the retailer is "pleased that the process is continuing to move forward."
In afternoon trading, Target shares were down 30 cents at $72.51 on the New York Stock Exchange.
The case is In re: Target Corporation Customer Data Security Breach Litigation, U.S. District Court, District of Minnesota, No. 14-md-02522.