Benefits of providing cards to employees for work-related purchases include lower administrative costs, such as those for cash advances, and closer tracking of employee spending to help prevent fraud. Image: Ekkamai Chaikanta/Shutterstock.com
By: FEDweek StaffFederal entities that accept payment by credit or debit cards “experience benefits such as enhanced customer satisfaction, improved operational efficiency, and the ability to track customer spending patterns,” but that comes at the cost of paying nearly $800 million in fees, the GAO has said.
GAO found 85 entities that accept cards for goods, services, and other payments totaling some 743 million transactions worth $43 billion in fiscal 2023. Some entities, such as Amtrak and DoD “non-appropriated fund” activities reported that more than 90 percent of their sales.
Officials from those and other entities GAO interviewed “said that consumers expect to be able to use payment cards for purchases or payments” and that other benefits beyond operational efficiency and ability to track spending patterns include combatting fraud and reducing cash handling and the threat of theft.
The fees to card issuers, networks, and companies that facilitated the transactions, averaging 1.8 percent of revenue, are in line with what private sector merchants pay, it said.
It said that some entities have taken steps to reduce those fees, for example limiting use of cards to certain types of transactions or to certain amounts, or by meeting transaction volumes that entitled them to discounts. However, agencies meanwhile “described challenges navigating complex network rules in their efforts to reduce fees” including two that “reported unsuccessful negotiations with card networks” over fees.
It added: “Benefits of providing cards to employees for work-related purchases include lower administrative costs, such as those for cash advances, and closer tracking of employee spending to help prevent fraud. Also, payment cards provided through the GSA SmartPay program generate spending-based refunds, which totaled $488 million in FY 2023 based on net eligible funds of $37 billion spent.”
The report made no recommendations.
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