How GSA SmartPay Works

The General Services Administration's (GSA) SmartPay Program provides agencies and other organizations with a comprehensive portfolio of purchase, travel, fleet, and integrated payment solutions.  Through a master contract with multiple banks, the GSA SmartPay program enables agencies, organizations and tribes across the Federal Government to obtain payment solutions to support mission needs.

Agencies/ Organizations issue a task order under the GSA SmartPay Master Contract and award their program to one of the GSA SmartPay contractor banks. The awarded bank provides payment solutions to the agency/ organization employees to make purchases on behalf of their agency/organization.

The GSA SmartPay Program offers four business lines of payment solutions including:  Purchase, Travel, Fleet, and Integrated. Payment solutions can be customized for enhancing internal controls, utilization of strategic payment solutions, and increasing range of payments eligible to earn refunds, while improving vendor cash flow.

Depending on the type of payment solution and agency/organization, there may be different requirements for applicants to participate in the program.

  • Purchase Account Holder:  In order to obtain a purchase account, an employee must be recommended by their supervisor and apply through their program coordinator.  Potential purchase account holders MUST complete purchase account holder training before using the purchase account.
  • Travel Account Holder:  Depending on the frequency of travel, agency or government wide policy may require that an employee obtains a GSA SmartPay travel account to make travel related purchases. Applicants may be subject to a creditworthiness check and MUST complete travel account holder training before using the travel account.
  • Fleet Accounts:  Fleet payment solutions are generally assigned to a vehicle, rather than an individual. Users of a government vehicle should contact their fleet program manager to learn more about their agency's fleet policy.

Description of how a GSA SmartPay Transaction works: STEP 1: An account holder uses a GSA SmartPay solution as a method of procurement and payment for the authorized purchase of goods and services. STEP 2: The acquiring bank receives authorization from the issuing bank through the brand network (VISA/ MC). STEP 3: The merchant finalizes the transaction and the acquiring bank requests payment from the issuing bank through the brand network. STEP 4: Once approved, the issuing bank provides funds to the acquiring bank through the brand network. The brand assesses an interchange fee on the approved amount. STEP 5: The acquiring bank assesses a processing fee on the approved funds and the merchant receives payment. STEP 6: The issuing bank bills the account holder for the full amount of the goods and/or services purchased.

Glossary of Terms Used in the Above Chart:

Account Holder: Any individual issued an account at the request of an agency/organization component. This may also include any vehicle/equipment (e.g. Fleet applications), designated portions of an agency/organization, or Contractors under a cost reimbursable contract for Purchase accounts, Fleet accounts, and Travel CBA only. Account holders include both individuals with carded (e.g. cardholders) and non-carded accounts. 

Merchant: The entity accepting payment from an agency/organization in exchange for supplies or services. The merchant may be a required source inside or outside the Federal Government, another government agency, or a private sector merchant of supplies or services.

Acquiring Bank: A financial institution that offers financial services and processes GSA SmartPay account payments on behalf of a merchant.  It allows merchants to accept payments from the issuing bank within the authorization network. 

Issuing Bank: A financial institution that issues the GSA SmartPay accounts to account holders and is responsible for paying the acquiring bank for the goods/ services purchased.   

Interchange Fee: A fee paid by the merchant’s financial institutions to the card issuing bank for processing its customer merchant payment transaction. In most instances, the interchange fee is a percentage of the total transaction amount, and is passed on to the merchant through the merchant financial institution’s fees.

Brand Network: A financial institution that dictates where payments can be processed and facilitates the payment process between account holders, cardholders, merchants, and issuing financial institutions.

Processing Fee:  A percentage-based fee charged by the acquiring bank to the merchant on every payment processed.