Purchase cards lay framework for e-commerce

Purchase cards lay framework for e-commerce

Move saves about $54 per transaction while streamlining buying process and improving payment

By Christopher J. Dorobek

GCN Staff

The simple move of distributing 618,000 government purchase cards was one of the most significant measures in laying the groundwork for electronic commerce, a senior General Services Administration official says.

Check out the stats
• Number of cardholders as of April: 618,000

• Number of transactions for fiscal 2000 as of April: 12.2 million

•Number of transactions in fiscal 1999: 21 million

• Administrative cost savings this year through use of the cards: $1 billion

• Amount saved per transaction: $53.77

• Growth of the SmartPay program between fiscal 1999 and the second quarter of fiscal 2000: 15.7 percent

•Estimated value of purchases by the end of fiscal 2000: $16 billion

Source: General Services Administration

Purchase cards let agencies streamline the buying process, use online catalogs, improve the payment process and make payments electronically, said Frank P. Pugliese Jr., commissioner of GSA's Federal Supply Service.

The government saves about $54 per transaction when an agency uses a credit card instead of a purchase order and check for a purchase, Pugliese said during a recent e-commerce forum in Washington sponsored by Visa International.

As to the reams of paperwork and processing of hard-copy purchase orders, 'the folks who used to do this stuff pretty much aren't around anymore,' he said.

The use of purchase cards has been the 'engine that has driven many of the changes in government' procurement, said Dennis J. Fischer, vice president of sales and integrated solutions for Visa USA Inc. and former commissioner of GSA's Federal Technology Service.

The cards also provide agency executives with more detailed reports so they can manage spending better, Fischer and Pugliese said. There has been a tremendous growth in use of the cards, the numbers of cards issued and the average transaction size, they said.

Agencies also now use the cards for more complex and larger buys than when the government first eased restrictions on their use two years ago [GCN, March 9, 1998, Page 12], Fischer said. Agencies use purchase cards for transactions totaling more than $2,500 and for payments on prenegotiated contracts.

There are also many interagency and intra-agency transactions that allow the use of purchase cards, Fischer said. The government treats some of its own interactions as regular commercial transactions, he said.

Although the cards have eased simple commodity purchases, their expanding use has not been painless, Pugliese said. There is still a lot of variation from agency to agency on the policies for using purchase cards, he said.


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