Emphasizing your company’s capability to accept government purchase cards can draw in more business. Purchase card transactions accounted for $26.4 billion of government purchases in fiscal year 2014. The Air Force used the card for nearly 1.5 million transactions and approximately $1.2 billion in total expenditure. The Department of Homeland Security (DHS) also took advantage of purchase cards. Around 9,700 DHS employees were authorized to make 925 million purchases amounting to approximately $439 million.

For most agencies, purchase cards are the preferred method for buying goods and services under $3,000. They aid purchasers by reducing the cost of transaction processing, easing auditing, and earning rebates. Banks that provide purchase cards also offer a rebate of around 2 percent for purchases made on cards. By using purchase cards in place of written purchase orders, the Air Force received a return of $14.7 million in rebates and created approximately $105 million in administrative savings for fiscal year 2013.

What is the micro-purchase threshold?

Transactions not exceeding the micro-purchase threshold of $3,000, except that the limit is $2,000 in the case of construction, do not have to fall under existing contracts, and contracting officers are often issued cards with higher thresholds. Micro-purchase threshold means $3,000, except:

  • For acquisitions of construction subject to the Davis-Bacon Act, $2,000;
  • For acquisitions of services subject to the Service Contract Act, $2,500; and
  • For acquisitions of supplies or services that, as determined by the head of the agency, are to be used to support a contingency operation or to facilitate defense against or recovery from nuclear, biological, chemical, or radiological attack, as described in 13.201(g)(1), except for construction subject to the Davis-Bacon Act (41 U.S.C. 428)
    • $15,000 in the case of any contract to be awarded and performed, or purchase to be made, inside the United States; and
    • $30,000 in the case of any contract to be awarded and performed, or purchase to be made, outside the United States.

Reference:  Federal Acquisition Regulation (FAR) Part 2.101 and the DoD Charge Card Guidebook

Some contractors are hesitant to deal with or promote federal purchase card transactions because procurement fees can take up to 3% off of federal purchases. Suppliers can reduce these fees through data capturing and negotiations.

There are three levels of credit-card purchasing, each defined by the amount of data and requirements needed for verification and authorization. Agencies reduce fees by up to 1.5 percent for companies that capture “level 3” data because it reduces paperwork on their end and helps the government identify the fraudulent use of cards.

Level 3 is the most detailed level of purchase card data collection, and requires:

  • Total purchase amount
  • Date of purchase
  • Merchant category code
  • Merchant name
  • City/state
  • Debit/credit indicator
  • Date charge/credit processed by Contractor
  • Contractor processing/transaction reference number for each charge
  • Sales tax amount
  • Company information
  • Unit cost
  • Quantities
  • Unit of measure
  • Product codes
  • Product descriptions
  • Ship to/from zip codes
  • Freight amount
  • Duty amount
  • Order date
  • Discount amount
  • Order number

You can also reduce fees to your company by negotiating with the banks issuing the cards. The GSA Smart Pay site lists the three issuing banks for government purchasing cards as Citibank, JP Morgan Chase, and US Bank. You can contact these banks directly to discuss lowering charges. Generally, the larger and older your business is, the more you can minimize your fees.

There are a few exceptions of the $3000 limit.  For example, SCA jobs are limited to $2,500

So don’t hesitate to emphasize your company’s willingness to handle government purchase card transactions. By doing so, you could bring in new business from a wide pool of card users and maximize your profits by properly managing your purchase card program.

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