MasterCard's three biggest issuers, Citigroup, Capital One and J.P. Morgan Chase, all rejected a settlement between MasterCard and Target over the latter's data breach.

Last month, Target settled with MasterCard for $19 million for the data breach that occurred at the retailer during the holiday season of 2013. According to The Wall Street Journal (WSJ), several banks rejected the deal at the time, but when news that those three issuers were among them, the settlement fell apart. 

WSJ's sources indicated that the banks thought the settlement was too small to cover their losses.

Target's breach, which was the result of malware infected point of sale terminals, exposed 40 million credit and debit cards to hackers. While the exact amount of damages to customers and issuers is unknown, several trade groups estimate that community banks and credit unions have spent over $350 million to replace credit and debit cards that were compromised in both the Target breach and the one at Home Depot several months later, WSJ reported.

The settlement required a backing of 90 percent of the banks issuing MasterCards. The three issuers hold the most sway, as the Nilson Report said that they account for 100 million MasterCards, which make roughly 40 percent of all MasterCard credit card purchases.

Negotiations between credit card companies and retailers in situations like this are common and rarely rejected, said WSJ. 

With the settlement rejected, further negotiations and court hears are expected. According to WSJ, news will probably be quiet until a class action law suit between Target and several small banks and credit unions is over. Target recently paid out $10 million in a separate class action suit with consumers over the breach. WSJ speculated that, if proceeding in the new suit continue to go against Target, larger issuers may join in to try to get a higher settlement.

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