Download Credit and Debit Cards: Federal Use by Unites States Government Accountability Office PDF

By Unites States Government Accountability Office

Via accepting playing cards, federal entities appreciate merits, together with extra happy shoppers, fewer undesirable tests and money thefts, and better operational potency. In financial yr 2007, federal entities accredited playing cards for over $27 billion in sales and paid no less than $433 million in linked service provider charges. For these in a position to individually establish interchange bills, those entities amassed $18.6 billion in card sales and paid $205 million in interchange charges. Federal entities are taking steps to manage card recognition expenses, together with reviewing transactions to make sure that the bottom interchange premiums - which could range via service provider classification, form of card used, and different elements - are assessed. whereas the Visa and grasp Card card networks have verified reduce interchange premiums for plenty of executive transactions, a few federal entities have tried to barter reduce ones, with combined luck. to spot discounts from playing cards and different assortment mechanisms, Treasury's monetary administration provider (FMS) - which handles sales and can pay service provider charges for plenty of federal entities - initiated a software in 2007 to study every one entity's total profit collections. FMS has pointed out strength potency and price saving advancements on the 8 entities it has reviewed to this point, yet has but to enhance a whole implementation method - together with a timeline for finishing all reports, rate rate reductions estimates, and source overview - which can aid expeditiously in attaining software ambitions. numerous nations have taken steps to decrease interchange charges, yet info on their results is proscribed. one of the 3 international locations the writer tested, regulators in Australia and Israel intervened on to determine limits on interchange premiums, whereas Mexico's banking organization voluntarily decreased a few premiums. due to the fact that Australia's regulators acted in 2003, overall service provider charges paid by way of retailers have declined, yet no conclusive facts exists that reduce interchange charges led retailers to minimize retail costs for items; extra, a few expenses for card clients, similar to annual and different charges, have elevated. Few info exist at the effect of the activities taken in Mexico (beginning in 2004) and Israel (beginning within the past due 1990s). as a result restricted info on results, and as the constitution and legislation of credits and debit card markets in those international locations range from these within the usa, estimating the influence of taking related activities within the usa is tough. Federal officers stated a number of merits from card use - which totalled over $27 billion in financial 12 months 2007, a fifty one percentage raise in view that economic 12 months 1999 after adjusting for inflation - together with the power to make purchases extra quick and with decrease administrative bills than with formerly used deciding to buy equipment. The banks that factor playing cards to federal entities additionally rebate a small percent in their card buy quantities; those rebates totalled $175 million in financial 12 months 2007. combating irrelevant card use poses demanding situations, and the writer and others have pointed out insufficient controls over numerous organisations' card courses. notwithstanding, instruments and knowledge supplied via the issuing banks now enable entities to study transactions extra fast, expanding their skill to observe suspicious transactions. Federal entities - enterprises, organizations, and others - are transforming into clients of credits and debit playing cards, as either 'merchants' (receiving funds) and dealers. retailers accepting playing cards incur charges - referred to as service provider charges - paid to banks to method the transactions. For Visa and grasp Card transactions, a wide section of those charges - known as interchange - is going to the card-issuing banks. a few nations have acted to restrict those charges. the writer was once requested to ascertain: the advantages and prices linked to federal entities' popularity of playing cards; the consequences of alternative international locations' activities to restrict interchange charges; and, the influence on federal entities of utilizing playing cards to make purchases. between different issues, the writer analysed price info and knowledge at the effect of accepting and utilizing playing cards from the dep. of the Treasury (Treasury) and the final prone management, reviewed literature, and interviewed officers of significant card businesses and 3 overseas governments.

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Extra info for Credit and Debit Cards: Federal Use

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56 Another benefit of card use for federal entities is the receipt of rebates from the banks that issue their cards. Rebate amounts, which, after adjusting for inflation, have almost doubled since fiscal year 2002 to $175 million in fiscal year 2007 (see fig. 3), are based on a number of factors, mainly the volume of net spending on cards and how quickly balances on the cards are paid. GSA establishes a minimum rebate rate that federal entities should receive, but entities can choose to negotiate with their 54 AGA Corporate Partner Advisory Group Research, “The Federal Purchase Card: Use, Policy, and Best Practice,” AGA CPAG Research Series, Report No.

38 The results confirm that opportunities for improvement exist, although only two of the eight agreements have been signed (the agency’s goal for the program for fiscal year 2008 is to have at least six of the eight agreements signed). Through the eight agreements that have been developed, FMS has identified various potential process improvements and changes that would result in recurring cost savings. C. § 901(b). The agencies listed in this provision are the Departments of Agriculture, Commerce, Defense, Education, Energy, Health and Human Services, Homeland Security, Housing and Urban Development, the Interior, Justice, Labor, State, Transportation, the Treasury, Veterans Affairs, and the Environmental Protection Agency, the National Aeronautics and Space Administration, the Agency for International Development, the General Services Administration, the National Science Foundation, the Nuclear Regulatory Commission, the Office of Personnel Management, the Small Business Administration, and the Social Security Administration.

The average merchant discount rate increased about 4 percent from fiscal year 2005 to fiscal year 2007. Among the entities included in our review, Amtrak, FMS, and the Postal Service provided data specifically showing the amount of interchange fees associated with their Visa and MasterCard transactions (their acquiring banks provide them with these data). 30 These interchange fees accounted for the majority of total merchant discount fees these entities paid for accepting all card types. As card revenues and merchant discount fees increased for these three entities, so did the interchange fees they paid.

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