Understanding Forced Posting

Forced posting, also known as a forced transaction, is a process where a merchant uses an existing or previous authorization on a customer’s card to initiate a debit. This method bypasses the usual authorization process that accompanies normal transactions, allowing the merchant to ensure they receive payment for a product or service that has already been provided to the customer.

While this can be useful in certain situations, such as when a regular transaction has been denied, it should be used with caution due to the potential for fraud. It’s also worth noting that policies regarding forced transactions can vary between card providers and merchants.

Sarah is already subscribed to Netflix’s premium plan at $15/month and her card is tied to her Netflix account.

Subscription Continuation: When the time comes for the next monthly payment, Netflix sends an authorization request to Miden (Sarah’s card provider) for $15.

Insufficient Funds: However, Sarah doesn’t have enough funds in her card to cover the subscription cost. When Netflix tries to debit the amount, the authorization fails because Miden cannot place a hold on the required funds.

Forced Posting: Despite the failed authorization, Netflix proceeds to force debit the card using an initial or existing authorization to the monthly debit. This results in Sarah’s card balance going into negative.

Note: 

1. This process is common with cards used for recurrent or subscription services. The use of a previous authorization to initiate a debit (forced posting) is typically employed when there are issues with the regular transaction process, ensuring that the merchant (Netflix, in this case) is able to receive payment for the service that has already been provided to the cardholder (Sarah).
2. Forced posting doesn't happen on terminated cards, however, if there was an initial attempt to utilise this card, shortly before the card is terminated, the forced posting will still take place. 
3. However, if the card is terminated before the due date, then forced posting will not happen.

The implications of forced posting can be significant and varied, depending on the perspective:

For the Cardholder:

1. Unexpected Debits: The cardholder will face unexpected debits from their account. If they don’t have sufficient funds, this could lead to their account going into the negative.

For the Card Provider (Miden’s Customers):

1. Inherited costs: If the negative balance on the card is not regularized within three days, this will be applied and charged to your account