January 18, 2015

By Mohana Ravindranath

Consumers may one day rely less on traditional magnetic-strip credit cards as technology companies and banks introduce new, potentially more secure payment methods — such as tapping smartphones at the register to make payments, or using credit cards with embedded chips that are scanned, not swiped.

Soon, the federal government could take cues from the commercial sector as it tries to improve the way employees make official charges for hotels, airfare, car rentals, and other purchases or services.

The General Services Administration has issued a request for information on cutting-edge payment systems, including smartphone and tablet-based methods, so-called contactless credit cards that do not need to be swiped, cardless charge accounts, apps such as Google Wallet and digital currency such as bitcoin. Newer systems could be more secure and protect against fraud, and they also could allow the GSA to track government payment patterns in aggregate, according to Dave Shea, director of the GSA’s Office of Charge Card Management.

The requested information — due Thursday — seeks to update the agency on payment technologies that have emerged since the GSA awarded contracts in 2008 to Citibank, JPMorgan Chase and U.S. Bank. Since then, “the industry has seen many changes in the way consumers and commercial entities make payments,” Shea said in a statement.

An executive order signed by President Obama in October directed the GSA to take steps by Jan. 1 to update its SmartPay system — which accounts for all GSA-issued charge cards — and mandated that the new payment technology have enhanced security features.

In the 2014 fiscal year, purchases through the system amounted to $26 billion, with spending by about 350 federal agencies, organizations and Native American tribes and a total of 3.29 million card holders.

The request for information precedes a formal request for proposals planned for 2016, with the awarding of contracts slated for 2017. Current contracts are set to expire in November 2018.


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