This article explains what Settlement Without Authorisations are, why they happen and what to do about them
What is a Settlement Without Authorisation ("SWA")?
SWAs, also known as Forced Post Transactions, are transactions that a merchant processes manually on a cardholder’s account without obtaining real-time authorisation from the card issuer. This means the transaction is forced through the system, regardless of whether the cardholder’s account has sufficient funds or whether it would typically be approved.
Why do SWAs occur?
They are a useful tool in scenarios where real-time authorisation is not feasible. While they should be used by merchants carefully, to ensure compliance with the card schemes, they are a key component of the payment eco-system.
There are many legitimate reasons for using SWA in Travel and supplier payments, for example when taking payments in locations with no connectivity, or where an initial authorisation has been obtained for a service, but the final amount is determined later. Keep reading for some specific examples of when SWA's might be used.
Legitimate Scenarios why a supplier may need to SWA:
- Offline Transactions:
- Example: In-flight purchases, on-board train purchases, or remote locations with no connectivity.
- Justification: Travel merchants in areas without real-time connectivity may use force post transactions to ensure service continuity. These transactions are processed once connectivity is restored.
- System Downtime/Outages:
- Examples: During network outages, system maintenance, or unexpected downtime.
- Justification: To maintain business operations during network issues, travel agencies and suppliers might force post transactions and reconcile once systems are back online.
- Pre-Authorised Transactions:
- Examples: Hotel check-ins, car rentals, or other services where initial authorisation has been obtained but the final amount is determined later.
- Justification: If a pre-authorisation was previously obtained, travel merchants might use a force post to finalise the transaction, especially if the cardholder has already left the location (e.g., after a hotel stay).
- Delayed Delivery Services:
- Examples: Booking tours, excursions, or other travel-related services.
- Justification: Some travel services might use force post for transactions where the service delivery is delayed, and authorisation cannot be obtained at the time of booking.
- Correcting Processing Errors:
- Examples: Rectifying system errors that resulted in failed transactions.
- Justification: If a legitimate travel-related transaction failed due to a processing error, a travel merchant might use a force post to correct this and ensure the transaction is completed.
The above list of examples are not exhaustive, and ultimately there may be other scenarios in which a Force Post Transaction is legitimate.
What should we do about SWAs?
Where the SWA has been performed in accordance with the agreement between you and your supplier, you do not need to do anything.
If you need to challenge a SWA, you should contact your supplier directly to resolve the issue. After you’ve attempted to contact the supplier, and if no resolution has been agreed, we can explore whether the transaction is eligible for chargeback. As SWAs are allowed by the card schemes, there is no guarantee that chargebacks will be accepted or successful.
A supplier has settled a card without authorisation and as a result I have a negative balance, what do I do?
Currently, we do not provide a credit facility, meaning that if your account has a negative balance as a result of an SWA, you must urgently transfer funds into your Pax2pay account to clear the negative balance.
The account holder is required to pay all settlements when requested to by the scheme, regardless of whether the funds are available in your account.
If you do not deposit funds into your Pax2pay account in a timely manner to clear the negative balance, your account is at risk of being frozen.
If you have any further questions or queries regarding forced settlements, please raise a ticket with our customer support team here.