Can Account Holders Use Their Account to Fund Alternative Payment Mechanisms?

Can account holders use their account to fund alternative payment mechanisms, such as PayPal?

Third Party Payment processors (e.g., PayPal, iBill, etc.) offer e-commerce/internet payment solutions for commercial transactions. The processors own merchant accounts that allow them to accept and process orders on behalf of other companies. Many vendors choose to utilize third party payment processors in order to accept online payments without having to establish a merchant account through a bank. Some vendors find that this is a more cost effective option, especially if they do not process enough transactions to establish their own merchant account to accept charge cards. Vendors pay third party processors a transaction fee for these services rather than processing transactions through a merchant bank.

Internet transactions that are made using third party payment platforms are considered to be high-risk transactions and it is recommended to GSA SmartPay account holders that alternative methods of payment should be considered. Although there are not any existing government-wide policies or procedures outlining the use of third party payment processors, several agencies have developed internal policies related to this issue. These policies range from the complete restriction of third party payment processors to less restrictive policies which allow for transactions to be made when a workaround cannot be identified.