Beyond the traditional plastic charge card, GSA SmartPay contractor banks offer customized carded solutions. Through these solutions, customers can create accounts with a set spend limit or balance, or limit cardholders to pre-set or pre-loaded funds. These cards may reduce administrative costs associated with paper-based payment and are a safe alternative to cash, checks, and electronic fund transfers. Spend on these innovative carded solutions can also be eligible for refunds. Available products include: Stored Value Cards, Declining Balance Cards, and Grants Payment Solutions.
Stored Value Cards
Agencies pay a specific dollar amount in advance for a Stored Value Card. These cards can have a single value load (e.g. rebate cards) or can be reloaded on a recurring basis (e.g. payroll cards). Levels of control and spend information are available through GSA SmartPay contractor bank Electronic Access Systems. Benefits may include:
- Immediate fund availability and flexibility
- PIN number can be provided for ATM withdrawals
- MasterCard or Visa branded
- Purchase restrictions through Merchant Category Code (MCC) restrictions
- No credit check and spend limits are not determined by credit history
- Option to issue as a non-personalized card for enhanced security
- Online access to view balance and transaction history
Declining Balance Cards
These cards function similarly to a traditional charge card, however limits do not refresh each month. These cards can be applied for a specific purpose or for a specified time period. Credit limits can either be reset as needed or the card becomes inactive once the balance is used. Declining Balance Cards do not require credit checks and spending limits are not determined by credit history (for individually billed accounts). Benefits may include:
- Financial flexibility and security
- Reduction of agency/organization administrative fees
- A flexible option for applicants who cannot be issued a charge card
- Safe and excellent alternative to cash and paper checks
Grants Payment Solutions
Many agencies face challenges in managing and distributing Federal grant dollars to grantee organizations. GSA SmartPay solutions may offer enhanced levels of transparency and accountability for grant oversight. Innovative products such as Stored Value Cards or Declining Balance Cards could be used to help agencies track and monitor grant payment. Agencies may also have the option to earn refunds. Please note that innovative non-carded solutions can also be customized for spend that may not be traditionally card-based.
This is a new concept for grants payment management in the Federal government. If interested, please contact the Office of Charge Card Management at firstname.lastname@example.org or (703) 605-2808 for more details.
Cardless solutions can be customized for large ticket transactions, payments to vendors not traditionally accepting cards, and one-time supplier payments or recurring transactions with a single vendor. These solutions can be a cost effective alternative for streamlining payment processes and earning refunds. Cardless accounts can also help agencies meet sustainability goals as transactions are 100% electronic. Available products include: Ghost Cards, Single Use Accounts, and Electronic Invoice Presentment and Payment (EIPP).
This is a centrally billed solution for customers who frequently do business with one vendor and have recurring payments. An account number can be assigned to the vendor and authorized agency personnel transactions occur without having to use multiple cards or accounts. Agencies currently have used this product for purchases such as airline tickets. Benefits may include:
- Reduced number of open accounts, payment processing and oversight easier
- Allows for multiple users
- Allows for a high level of control
- Reduces the risk of lost or stolen cards
Please note that agencies must work closely with the GSA SmartPay contractor bank and vendors to determine feasibility of implementing this solution.
Single Use Cards
This solution uses a virtual account number for a limited time period, dollar amount, and specific vendor. Internal controls such as MCC blocks, spend limits, timeframes, and account expiration dates can be used for increased control. Agencies also have the ability to append accounting data for seamless reconciliation. Examples of use include payment invoice and contract payments, helping to ensure that merchants are not able to charge more than approved amounts. Benefits may include:
- Accounts can be activated in real time
- Controls can be placed on account allowing for increased oversight of spend
- Disposable; one-time use account numbers reduce the risk of fraud
- Seamless reconciliation
- Reduces the necessity for using convenience checks
Electronic Invoice Presentment and Payment
EIPP solutions allow agencies and merchants to manage an entire invoice and payment cycle online, eliminating the need for paper-based billing. EIPP capability supports invoice tracking and management through an online portal, directly connecting buyers with suppliers. This solution shortens the length of time that sales are outstanding and avoids costs associated with paper-based payment systems. This solution also allows agency personnel to use electronic payments to pay merchants who traditionally do not accept card based payments on high dollar transactions. Benefits may include:
- Improved cash-flow visibility; status of each invoice can be viewed online
- Early payment options improves vendor cash flow
- Accelerated payment settlement due to elimination of mail and float time associated with paper-based processes
- Increased visibility and control over invoice tracking and history for buyers and suppliers
- Efficient payment process reduces number of late payments and the need to pay Prompt Payment Act penalty interest
Secure microchip technology has become widely accepted internationally and has begun to be implemented domestically (e.g. gas contact cards and transit cards). Available products include: Contactless Chip Cards and Contact Chip Cards.
Contactless Chip Cards
This product includes a chip and integrated antenna in a traditional magnetic strip card. As an alternative to swiping a card through a card reader, the Contactless Chip Card captures transaction details without the need for swiping through a card reader. These cards can be used in highly secure data transmission, as this card has enhanced security features that make it difficult for data to be copied and reused by potential fraudsters.
Contact Chip Cards
Contact chip cards are another new form of plastic with a specialized chip integrated within the plastic. Over time this type of card may eliminate the need for a magnetic strip to appear on the back of the traditional plastic, and will hold information more securely. Transactions are authenticated using a secret key that is securely stored on the chip. In addition, contact cards optionally allow for the cardholder to enter a PIN, to help protect against fraudulent use of the card when the card has been lost or stolen. Banks are now able to offer contact chip cards through the GSA SmartPay program as long as they are used in compliance with Europay, Mastercard and Visa (EMV) standards.
The primary benefits of contact chip cards are greater worldwide interoperability coupled with enhanced security and protection against fraud. Greater security is provided by:
- Advanced tamper-proof chip technology
- The inclusion of a dynamic cryptogram with each transaction
- The ability to authenticate the cardholder with a secure PIN number
GSA SmartPay Chip and PIN enabled charge cards
Chip and PIN-enabled cards have an embedded microprocessor chip that encrypts transaction data differently for each purchase. It is inserted into a terminal where the chip is read, and a pin number or signature is required. Chip and PIN, a global payments technology, is available under the GSA SmartPay 2 master contract. These cards will be rolled out to agencies beginning in 2015.
History of Chip and PIN
France was the first country to begin using the chip and PIN technology standard for payment in 1992. By 2006, the UK had fully deployed chip and PIN technology. It is now used in over 130 countries. Believe it or not, the U.S. is one of the few industrialized nations that has not fully migrated to the chip and PIN technology standard!
There are currently over 1.2 Billion chip and PIN enabled payment cards in circulation and that number is rapidly growing. These cards are already accepted by many merchants and are set to become an industry standard in the US.
Here are a few advantages:
- Increased Security and Fraud Reduction: One of the major advantages of making in-person purchases with chip and PIN technology is increased security and fraud reduction, due to the embedded microchip. Data from a traditional card with a magnetic stripe can be easily copied with a simple and inexpensive card reading device. The payment information on a mag-stripe card never changes making it easy for criminals to steal the information and create a counterfeit card. chip and PIN -enabled cards, on the other hand, have an embedded microchip that turns cardholder information into a unique code for each transaction made at a chip terminal. This provides better fraud protection than traditional cards. Preventing the growth of fraudulent activity is one of the main reasons the industry has moved toward chip and PIN technology. Since many other countries have already adopted chip and PIN technology, many fraudsters have started targeting the magnetic stripe cards that are primarily used in the U.S. Clearly, there is any increasing value for the U.S. to also convert to chip and PIN cards since magnetic stripe cards have been compromised much more frequently, while chip and PIN cards in other countries have not. Merchants will also appreciate the reduction of fraud and related chargebacks.
- Global Acceptance: Another significant advantage of chip and PIN cards is that they are accepted globally, eliminating the need to obtain additional cards for use on official government travel in other countries. The global acceptance of these cards will help standardize point-of-sale experiences.
- Ease of Use: Cardholders will not need to make many changes, as chip and PIN cards are simply inserted into a chip terminal instead of swiped. To make a transaction at a chip terminal, you would follow the terminal prompts. If a merchant does not yet have a chip terminal, you would simply swipe your card as usual since it still has a magnetic stripe. For phone and online transactions, complete your transaction as usual.
The Liability Shift
When will merchants be equipped with the new chip terminals?
A “liability shift” will occur in October 2015. At this time, merchants who have not invested in a payment system that accommodates chip and PIN technology will be held financially liable for any fraud that occurs. However, if a magnetic stripe card is presented at a chip terminal, the fraud will still be the liability of the card issuer. As a result, many card issuers are automatically issuing chip and PIN cards to customers to reduce the risk of being liable for any fraud that might occur.
Now is a great time to begin using a GSA SmartPay chip and PIN charge card since many merchants will be converting their systems to accept chip and PIN cards by October 2015. While most vendors that accept GSA SmartPay travel and purchase cards will have converted their systems by October 2015, most fuel vendors for the GSA SmartPay fleet card will convert by October 2017.
Agencies with foreign operations or those that may deploy personnel internationally for extended periods of time can take advantage of this product as funds spent are billed and paid with local currency, thus avoiding foreign exchange fees.
The benefits of the foreign currency solution being aligned with common business practices of a specific country or area in the world include:
- Elimination of foreign currency exchange fees
- Customer service and issue resolution in local language
- Availability to issue cards in predefined global locations
- Authorization and settlement of transactions occur in local currency, eliminating exchange fees for in-country transactions
- Foreign currency cards allow for customer support in the local language