Credit Cards

Pursuant to a congressional request, GAO provided information on the use of credit cards for intragovernmental transfers and on the General Services Administration's (GSA) new contracts for credit card services, focusing on: (1) how intragovernmental transfers are currently processed using GSA's International Merchant Purchase Authorization Card (IMPAC card) and the Department of the Treasury's Uncle Sam Acquisition (USA) card; (2) issues of concern involving the use of credit cards for intragovernmental transfers and actions being taken to address these issues; and (3) GSA's decision to use multiple contracts to replace the expiring purchase, travel, and fleet credit/charge card contracts.

GAO noted that: (1) intragovernmental transfers made using GSA's contract with US Bank for the IMPAC card are processed commercially as VISA credit card transactions, while those transfers made using Treasury's Plastic Card Collections Network agreement with NationsBank for the USA card are processed and settled as accounting transactions within the government; (2) GSA has offered the IMPAC card governmentwide since 1989 for federal agencies to use to purchase products and services; (3) as a commercial credit card, the IMPAC card can be used to make purchases from the private sector as well as from other federal agencies--that is, intragovernmental transfers; (4) until October 1997, intragovernmental transfers made using the IMPAC card were processed in the same manner as purchases from private vendors, including payment of a discount fee; (5) in October 1997, GSA and US Bank agreed to modify the IMPAC card contract to pilot test three changes for intragovernmental transfers; (6) before the October 1997 changes, Treasury expressed three concerns with the use of the IMPAC card for intragovernmental transfers: (a) the cost of the discount fee paid for processing the transfers; (b) the fact that money left the government to be transferred from one federal agency's account to another's account, which required more cash to be kept on hand; and (c) the fact that the transfers were not readily identifiable as intragovernmental in accounting records; (7) to address these concerns, in July 1997, Treasury piloted the issuance of a credit card, called the USA card, specifically for intragovernmental transfers; (8) the USA card, issued by NationsBank, is a private-label card, much like a department store credit card, that can be used only at specific merchants; (9) federal agencies can only use the USA card for intragovernmental transfers with federal agencies that have agreed to accept the card and have obtained the computer software necessary to process the transfers; (10) in April 1997, the Intragovernmental Transfers Subgroup was created to develop governmentwide policies and procedures for the use of credit cards for intragovernmental transfers; (11) as a separate initiative, GSA is replacing the three expiring contracts for governmentwide purchase, travel, and fleet credit/charge cards with six contracts that can each include all three types of credit/charge cards; and (12) GSA decided that having multiple contractors for each type of card could lead to competition among contractors for agencies' obtaining the best mix of services for the lowest price.