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The Flip Side of Government Credit Cards

By: Gloria Larkin, Expert Guest Editor – Government Contracting and owner of TargetGov

One of the least understood but easiest ways to sell to and accept payment from the U.S. federal government for services and goods is through the ubiquitous credit card. GSA SmartPay is the the largest government charge card program in the world and it operates just like commercial credit cards such as Visa or MasterCard.

According to the General Services Administration (GSA), there are currently over 350 agencies/organizations participating in the credit card program spending over $30 billion annually, through 100 million transactions on over three million cards.

Through the GSA SmartPay Program, agencies are able to obtain Purchase, Travel, Fleet, and Integrated Charge Cards (known as business lines) through a master contract with selected banks; Citibank, JPMorgan Chase, U.S. Bank.

Any government employee who is authorized to carry a SmartPay card has been assigned a spending limit, and may spend up to $3,000 per transaction or authorized period (such as a month). Some may have higher authorization limits: up to $25,000 or even $150,000.  The highest limits are usually reserved for crisis, disaster or national security-related purchases where immediate vendor response is demanded, such as a result of hurricanes, earthquakes and other natural disasters.

Government SmartPay cards, also called purchase or credit cards, may not be used for personal use or unauthorized purchases or purchases that do not comply with the Federal Acquisition Regulation (FAR) or other procurement regulations.

While there are pros and cons of government credit cards, it is an undeniable fact that contractors who want to see faster market entry and immediate payment will define their offerings in terms attractive to buyers who use the cards and market aggressively to those buyers. This means understanding that both services and products can be purchased through credit cards and a normal transaction must be under the $3,000 limit.

Generally, selling products under this $3,000 limit via credit cards is simple to understand. If an item costs $299, then ten can be purchased and remain under the limit. The challenge can arise when services must be thought of in segments of $3,000 or less per transaction. This is generally an issue of understanding labor rates, and then pricing and marketing the services to match customer needs. However, it is not acceptable to game the system and break down a larger transaction to smaller amounts just to stay under the dollar limit. This is a serious transgression and punishable by fines, debarment and potential jail time.

If a businessperson invests the time and energy to learn the rules and regulations, selling to the federal government by accepting federal credit cards as normal business operations will open the door to millions of dollars in revenues. For more information visit the GSA SmartPay web site at: http://smartpay.gsa.gov.

To learn more about selling products or services to the government visit the TargetGov website, www.targetgov.com and browse through our Resource Library for webinars and tool kits specific to your need.

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