Acquisition Cards and Service Fees

Procurement Bulletin 2018-6

April 10th, 2018

The Department encourages usage of the Acquisition Card (AC) for all eligible low dollar value purchases of goods and services as according to the Visa Procure-To-Pay Best Practices for the Federal Government the cost of using the acquisition card versus the standard Purchase Order results in approximately $53 savings per transaction. Other studies suggest savings ranging between $50 and $150, depending on the requirement and the organization.

Vendors who accept the AC for payment reap considerable benefits to outweigh the cost related to card acceptance, including processing cost reduction, electronically deposited funds, faster receipt of payments and improved cash flow as well as customer satisfaction.

However, an increasing number of cardholders have reported that certain vendors charge service fees that range from 1% to 10% to use the Acquisition Card. According to VISA’s merchant rules, vendors generally cannot charge a service fee when consumers use their credit card. However, VISA permits eligible merchants to charge a service fee for certain types of transactions.

To ensure effective and appropriate use of taxpayer dollars within the Department, the guidelines below should be followed:

It is the responsibility of the cardholder to confirm with the vendor the cost, the mode of payment as well as the terms and conditions prior to purchase. This is usually done at the time of requesting a quote.

It is up to the authorized manager signing section 32 to decide whether or not to proceed with the purchase. Here are some guidelines to assist you in making your decision:

  1. In cases where the service fee isdisclosed:

    1. Request that the vendor remove the fee and agree that there will be no additional charge to use the acquisition card.
    2. If the vendor will not remove the fee you should:
      1. Determine whether the service fee is an acceptable amount when compared to the cost of obtaining the service or good from another merchant who does not charge the fee; and
      2. Determine whether the service fee represents a lower cost to the department than issuing a purchase order. If in doubt contact the NC-PURCHASING_PORTAL.
    3. In cases where it is determined that it will be more cost effective to the department to issue a purchase order, you should submit a PReq in MyEMS and clearly include your rationale in the header text.

  2. In cases where merchants attempt to charge a service fee at the time of invoice:

    1. Inform the merchant that the department refuses to pay the service fee as it was not disclosed when provided with the quote. All fees must be clearly disclosed to cardholders before the transaction is completed and cardholders must be able to cancel the transaction without penalty.
    2. Report the vendor to the National Acquisition Card Coordinator through the NC-PURCHASING-PORTAL who will raise the issue with the card provider.

Questions and comments of a general nature related to the contents of this bulletin can be sent to the Asset Management Policy and Procurement (AMPP) team by email at NC-PURCHASING_PORTAL-PORTAIL_D'ACHATS-GD.

It is the cardholder’s responsibility to share all information and communications with their manager as well as all other colleagues who might be affected.

Distribution:

  1. Acquisition Card Cardholders