Strategic Payment Solutions

>> Hello everyone I hope you are enjoying the GSA Smart Pay forum so far My name is Joline McDonald, and I work for the Center for Charge Card Management Today we are going to learn about all of the strategic payment solutions that are offered in the GSA Smart Pay 3 master contract, and see how your agency might benefit from utilizing these solutions Today we are going to discuss some things to think about when determining how to best use strategic payments within your agency We are also going to go over the three main areas of strategic payment which are card not present solutions, the GSA Smart Pay travel tax advantage card offering, and ePayable solution Once you learn more about these offerings, we will talk about next steps you need to take to implement the solutions within your program Many agencies are extremely well versed and efficient in running their charge card program They have been around for 20 years, after all Despite all of that working knowledge of the program, many agencies still do not know or are not taking advantage of the wide variety of payment solutions that are available through GSA Smart Pay Let’s think through some of the below questions Do you see room for increased payment opportunities within your agency? Are there situations where a physical card cannot be used? For example, do you have card holders in remote locations purchasing from vendors that don’t accept cards? Are your agency’s payment solutions being used effectively and efficiently? Are you maximizing the use of various payment options when making payments for products, services, or travel? Would you use a GSA Smart Pay payment solution for qualifying contract payments? Have you done more research in to the percentage of contract payments being made by a GSA Smart Payment solution? Have you looked in to ways to move your contract payments over to the program? [Inaudible] use a GSA Smart Pay payment solution for recurring payment such as utilities or subscriptions? Recurring payments are one of the easiest ways to [inaudible] through the program, and increase [inaudible] Finally are you interested in increasing your refunds? I think any of us would definitely answer this one with a resounding yes When asking these questions, it’s important to remember to develop your payment strategy with a defined goal in mind Think something like convenience check reduction or improved efficiency We can often look to our personal life to understand the vast amount of payment options in industry How many of us use things like mobile payments, contactless payments, or biometrics when buying things in our personal life? We can look to industry trends to get some ideas for how to improve and modernize government programs as well Industry trends such as contactless and mobile payments as well as the increased use of biometrics or increased security are important to watch as you think about the next steps for your GSA Smart Pay program I would imagine that now more than ever you are utilizing contactless and mobile payments in your personal life, especially with less in person and on site transactions taking place In addition, biometrics have really started to take off in the industry Many of us utilize things like fingerprint recognition in our personal mobile devices, including authorizing payments from our mobile wallet Biometrics allow for an extra layer of security, and continue to increase greatly throughout the payments industry Now that we have thought through some of the high level questions to ask when considering the solutions, let’s dive in to all that the GSA Smart Pay 3 master contract has to offer your agency First we have the four [inaudible] solutions which are ghost cards, declining balance cards, single use accounts, and mobile payment The next solution we will discuss is the GSA Smart Pay travel tax advantage card Finally we will take a look at several potential ePayable solutions The card not present solution is a mechanism to complete a transactions without having a physical card in place As the payment [inaudible] embraces more digital transactions, card not present solutions are becoming more and more common Both consumer and commercial entities have transitioned to making a large portion of their purchases online as opposed to an in person at brick and mortar locations Federal agencies are also following suit, and the trend towards online purchasing continues to grow In addition, many commercial entities have implemented digital payment offerings at their physical locations

Card not present solutions available under the GSA Smart Pay [inaudible] master contract include ghost cards, declining balance cards, single use accounts, and mobile payments These solutions are offered as tier one products and services or core products under the GSA Smart Pay master contract This means that the contractor banks are required to provide the solutions at no additional cost to your agency However these solutions must be included in your agency’s task order in order for you to take advantage of these offerings in your programs First off on our card not present solutions is the ghost card A ghost card is an account number that is specific to an agency or an entity within an agency The term card can be misleading since there is no need for a physical plastic card for the transactions to take place The ghost card is a centrally billed account or CBA that is designated specifically for a supplier frequently used by an agency, and allows any authorized agency personnel to purchase from that vendor without having to use multiple cards or accounts The ghost card is typically managed in a central location by one office or department within an agency A ghost card allows for an agency to consolidate purchases to a single vendor under one account This aids in reconciliation as well as transaction oversight Agencies can use ghost cards for purchases such as booking airfare for travelers or paying utilities It’s important to note that accounts are issued in the agency or department name instead of an individual’s name, and they have different charge back and dispute rights Like the declining balance card, the ghost card has the option for use in the form of a traditional plastic card Agencies should check with their GSA Smart Pay contract or bank for additional details if the option is included in the task order Use of the ghost card improves operational efficiencies, reduces administrative costs, and allows an agency to earn additional refunds As a best practice, agency employees responsible for ghost cards should work closely with the vendor to ensure that the vendor is capable of passing a minimum of level two data in order to aid in the reconciliation process For example, centrally billed travel accounts use the passenger name in order to aid in reconciliation Let’s look at a real life example of an agency that utilizes the ghost card within their program Under GSA Smart Pay two and continuing in to GSA Smart Pay three the department of state developed the payment card program which is a program that utilizes a ghost card for recurring purchases of supplies and services The department of state uses the payment card for purchases such as small package shipments, services, domestic and overseas utilities, and telecommunications The account is limited to a single identified vendor, meaning each payment card account number is designated solely to a vendor for a specific type of purchase For example, the state may have a payment card account number dedicated to paying small package shipments through FedEx The department of state realizes some key benefits through the use of their payment card program, including a significant reduction in the number of invoice payments that need to be processed, a reduction in interest penalties and costs due to the increased speed of payments, a consolidation of individual charges, and improved oversight and tracking of spend using online tools offered by the bank to track the payments through their payment card program This is just one example of how a ghost card solution has helped an agency to gain numerous efficiencies, increase spend, and increase refunds within their program Second of our list on card not present solutions is the declining balance card Declining balance cards have the same functionality as a charge card, but the limits on the declining balance cards don’t have to refresh each month These cards have central liability, and are paid for by the agency much like the purchase or travel centrally billed accounts This type of card can be set for a specific purpose for a specified time period, and with a predetermined credit limit The credit limit can be reset as needed, set for a specified time, or can become inactive once the balance is depleted A great benefit of the declining balance card is that it allows for greater oversight and control And, like a traditional CBA, an agency pays for the amount designated on the card as the card is depleted, not when the card is set up and limit designated It would not be considered an advance payment Similar authorization controls such as MCC blocks can be used on these types of cards

in the same way that they are used to control the traditional [inaudible] program card I do want to point out that although we categorize a declining balance card as a potential card not present payment solution, your agency may want to use this solution in the form of a traditional plastic charge card as well When might an agency consider using this type of solution? An example is if an agency has recurring payments with limitations like on a monthly or quarterly basis such as transportation subsidies The declining balance solution offers several key benefits, including improved operational efficiencies, reduction in administrative costs, and the potential to earn more refunds Let’s look at a real life example of an agency that utilizes a declining balance solution within their program The United States Postal Service decided to develop the uniform allowance program as a pilot program under GSA Smart Pay three This program would allow employees to purchase their uniforms utilized for the job through declining balance cards USPS set account limits in accordance with agency policy for each card, and each card refreshes annually based on the employee’s anniversary date USPS has already noticed a couple of key benefits from switching to this program through a declining balance card, including no more need to establish an entirely separate contract outside of the GSA Smart Pay three master contract which states contract management fees Also they have seen an increased ability to have oversight and to spend, an increased transparency and controls In addition, hopefully USPS will recognize increased refunds by moving this portion of spend under the program This is a simple example of how USPS recognized an opportunity to move spend in to their program to realize greater efficiencies and refunds through a declining balance solution The next solution is single use accounts Single use accounts allow an agency to use a virtual account number for a single payment The limit on each single use account is equal to the single payment amount An SUA can provide your agency with a precise set of controls surrounding a single payment This includes establishing the virtual account number for a single dollar amount, a limited amount of time, MCC blocks, and account expiration dates Agencies also have the ability to append accounting data for CMOs reconciliation Similar to the declining balance parting ghost card, agencies may consider using this solution in the form of a traditional plastic charge card SUAs are a great option if your agency is looking to reduce the number of convenience checks being written Using an account number one time increases the oversight in to the payment data while also reducing the risk of fraud as compared to convenience checks Single use accounts are also an excellent choice for those looking to expand contract payments through the GSA Smart Pay program SUAs allow agencies to make invoice payments to a specific vendor for a specific invoice, and include controls to ensure that the vendor only receives the invoice amount Agencies can greatly maximize refunds by moving contract payments to single use accounts Use of the SUA can benefit agencies by providing better spend control through MCC blocks and spend limits, better tracking of payments, increased payment security, increased card program spend, and a reduction in erroneous payments Check out our smart tip for SUAs SUAs would make a great replacement for convenience checks, and a great way to make contract payments In what situations might an SUA be beneficial? Think about if your agency has a unique mission that requires the use of temporary employees, a large amount of part time employees, or frequently has an influx of new employees You may be among the many agencies that do The department of defense which constantly hires new recruits for active duty and boot camp, the bureau of labor statistics which hires temporary employees for the census, and the federal emergency management agency or FEMA which hires temporary employees for emergencies such as natural disaster assistance, are examples of agencies that fall in to one of these categories Payments to these types of employees can be an administrative burden, and carry a high risk of erroneous payments and difficult oversight Now what if your agency could use a strategic payment solution to lower those risks and streamline the payment process?

SUA solutions would allow just that SUAs allow agencies to establish one account for these employees that can include a large amount of controls such as increased merchant category code blocks and established spend limits [Inaudible] practical use examples to consider A DOD agency sends new personnel to boot camp where trainees may be provided a voucher to cover expenses during the training time period Instead of a voucher, the trainees could be provided with SUA virtual cards to cover those expenses This would allow for spending limits, increased controls, and increased transparency in to their expenditures Our final card not present category to discuss is mobile payments Mobile payments allow agencies to make secure payments via a mobile device at the point of sale Essentially a mobile payment is a version of a charge card loaded on to a mobile device like a smart phone so that the card holder doesn’t have to carry a plastic charge card Mobile payments use has greatly increased in the consumer card industry, and has started to gain traction in the corporate card industry Many brick and mortar retailers accept some form of mobile payments Under the GSA Smart Pay three master contract, mobile payments are offered to your agency at no additional charge However it’s important to note that each agency must determine its own policies and procedures regarding the implementation of mobile payments For example, your agency must determine whether mobile payments are allowable for CBA accounts and/or IBA accounts In addition, it’s important to review the types of mobile devices approved for implementation If your agency provides employees with mobile devices, it may have a policy that allows for mobile payments to only be authorized on agency owned mobile devices If your agency does not provide employees with mobile devices, it may be determined that individual card holders will be authorized to use mobile payments on their personal devices Mobile payments are becoming increasing popular in our everyday lives I would guess that the majority of us utilize some sort of mobile wallet or app to make payments in our personal lives Think about the types of purchases you typically make Things like grocery purchases, coffee shops, and restaurants are all basic examples of places we often pay through payment apps for mobile wallet In fact, it’s estimated that there will be over 1 billion people worldwide expected to make mobile payments in 2020 As the technology continues to grow, more and more vendors start to accept these types of payments, and usage will continue to increase So okay. That’s great for my personal life, and my morning coffee runs But how can I use it in my agency? Remember mobile payments are offered on all business lines Some examples of use might be to have your IBA travel card included in a mobile wallet on your work mobile device This way when you go on travel, you can pay for things like your meals, transportation, and airfare with your mobile wallet For the purchase card, you may want to consider having the purchase card on the mobile device for the individuals that make a lot of payments at the point of sale location This could be especially useful during emergencies when card holders have to go to a specific location and make payments when existing infrastructure might not be available There are multiple agencies currently exploring utilizing mobile payments under their GSA Smart Pay three task order Mobile payments under the travel card program would allow for flexibility during employee travel For the purchase card program, they would allow for employees to make purchases at the point of sale without carrying a physical card outside of their office location As agencies continue to explore their options for utilizing mobile payments, they will need to make decisions on how to implement in accordance with their agency specific policies and procedures Some agencies may only authorize these types of payments on government issued mobile devices while others may allow for payments through the employees’ personal mobile devices It is important to check with your agency on how to best implement this solution Now that we’ve introduced you to the card not present solution in GSA Smart Pay, let’s take a moment to recap ways these solutions can be leveraged Many agencies have recurring payments for a wide variety of products or services such as payments for rent, utilities, and contract payments, and much more

As mentioned earlier, declining balance cards can be used for recurring payments However single use accounts and ghost cards can be used for recurring payments also Travel programs can benefit from card not present solutions Agencies conducting operations outside of the United States or those with frequent international travel may experience issues with travel card acceptance in certain countries Card not present solutions can provide a means to alleviate some of these issues Here are a few examples to illustrate this Prior to a traveler arriving, an agency can send a hotel the necessary card information, perhaps an SUA, for payment directly to cover lodging, and reduce time spent processing travel expenses An agency has infrequent travelers or invitational travelers such as a scientist invited to speak at a medical conference The agency provides a declining balance card to cover costs associated for the duration of the trip An agency provides foreign nationals a declining balance card to replace disbursement of physical cash for expenses to maintain control of finances The next solution we want to discuss is the GSA Smart Pay tax advantage travel card account The GSA Smart Pay tax advantage travel card gives your agency the opportunity to gain tax exemption at the point of sale for rental car and lodging purchases while on official government travel This is a new offering under the GSA Smart Pay three master contract, and it is offered as a tier one item which means it is at no additional cost to your agency It is unique to the travel business line, and agencies can utilize these types of cards if they are eligible authorized to utilize individually billed accounts The biggest benefit to the tax advantage travel card account is that your agency will not have to pay taxes at the point of sale for lodging and rental car purchases This can save your agency a lot of money spent on taxes that would traditionally be charged to an IBA travel card account The tax advantage travel card is set up as a CBA, but issued to an individual using IBA procedures such as credit worthiness assessments which means it will still be issued in the individual’s name This allows the liability for the card to essentially be split depending on the type of purchase or merchant category code for the purchase Rental car and lodging MCCs will be considered centrally billed, and paid directly by the agency And other travel related expenses will be considered individually billed, and paid by the card holder, as done currently with a traditional IBA travel card The card has its own unique card design which is gray instead of blue, and also has its own — card at the point of sale It is set up similarly to other travel cards for the purposes of reporting and management However agencies are able to request additional reports if they would like by working with their bank to create ad hoc reports As mentioned earlier, the invoicing is split between CBA and IBA charges depending on the MCC The individual card holder will receive a statement of account for the IBA charges that they’re responsible to pay The agency will receive an invoice for the CBA charges that they are responsible to pay Each entity pays their portion of the charges separately while saving the agency money on taxes that are not charged on the CBA portion Now let’s take a look at an example of an agency that is currently utilizing the travel tax advantage solution Under the GSA Smart Pay two contract, the department of the interior utilized an integrated card solution that combined purchase travel and [inaudible] cards within a single card After the GSA Smart Pay three program, interior decided to utilize separate business lines instead of an integrated card However they wanted to continue to realize the tax exemption benefits that they experienced for travelers when using the integrated card Starting in March of 2018, interior worked alongside their GSA Smart Pay three bank to implement the travel tax advantage card They worked to ensure that transactions for certain merchant category codes automatically divert to the CBA account with additional flexibilities to request IBA and CBA transaction reversals if the transaction should fall under a tax exempt category

Interior has recognized a couple of key benefits from utilizing the travel tax advantage card, including the ability to avoid paying taxes on hotel and rental car purchases at the point of sale, and the separation of IBA and CBA billing by transactions for payment The travel tax advantage account provides a great opportunity for agencies to save money on taxes that they would otherwise pay utilizing a traditional IBA account EPayables are new offerings under the GSA Smart Pay three master contract These solutions provide your agency with the capability to make payments directly to a specific supplier through an established relationship For example, many of us pay bills through online bill payment by setting up the ability for your bank to send money to various providers such as your cable company or the ability for the company to pull the money from your account at a set time such as a monthly basis in your personal lives You can write a lot of checks out to pay bills these days This is the type of relationship that an ePayable solution establishes How can ePayables benefit your agency? In the simplest of terms, ePayables can help your agency reduce payment times, increase [inaudible] data, and provide you with a new payment mechanism to expand your payment options ePayable solutions offered under the GSA Smart Pay contract include [inaudible] processing, buyer initiated payments, and supplier initiated payments Let’s take a few minutes to learn about how each of the offered ePayables work Supplier initiated payments are the process of electronically connecting suppliers or other merchants to the government supply chain and back end payment systems This type of ePayables allows a supplier to enroll with a GSA Smart Pay contractor bank in order to connect to an agency supply chain or bank and payment system The GSA Smart Pay contractor bank prepares the invoices and processes approved invoices on behalf of the agency The contractor bank remits payment to the supplier or merchant utilizing agency payment files for disbursement against designated accounts for specific transactions This chart provides you with a visual flow of how a supplier initiated payment would work First you work with your bank to sign up a supplier This occurs before they can invoice you, and establishes a direct payment relationship Once they are enrolled, and any other items such as contractual documents are in place, the supplier will provide the product or service and invoice your agency for that product or service The invoice is for the agency payment However, it gets sent through the bank’s electronic access system to the agency As with normal invoicing procedures, your agency will then approve the invoice in your financial system, and the approval or transaction will get processed by the bank and sent to the supplier Your agency is notified through the electronic access system that the bank has paid the supplier, and you then reconcile the transaction Basically the merchant invoices, the agency approves, and the payment is made, all while the bank works behind the scenes to move the process along Now that we see how supplier initiated payments work, let’s go through a potential way that your agency might utilize this offering I bet many of us have recurring payments within your agency such as monthly subscription services, or make regular payments to the same merchant This is one example of how an agency could easily replace a traditional invoicing and financial payment setup with supplier initiated payment As we discussed in the previous slide, your agency could work with the bank to sign up a vendor Let’s use a trade magazine subscription service as an example You would receive the invoice for the subscription services on a set date every month Maybe you set it up to receive the invoice on the first calendar day of every month The payment is made to the company through the bank, and the agency can see and reconcile the transaction in the EAS The next ePayable that we would like to discuss is buyer initiated payment Buyer initiated payments are a type of transaction that requires no action by the supplier or the merchant No point of sale terminals or other hardware or software is required to receive payment This is offered as a tier two solution under the GSA Smart Pay three master contract This means that the bank has the option to provide it to the agencies

It is available for all business lines Note that you should make sure you check your agency’s task order to see if it has been included as an option for you This chart provides you with a visual flow of how a buyer initiated payment would work In a buyer initiated payment, your agency orders the product or service from the supplier, and receives an invoice directly from the supplier as usual Instead of pushing the payment directly to the supplier, however, the payment data file is sent to your contractor bank to process The money is funded by the agency in to the account created by the bank, and the vendor directly charges the account for payment The payment or transaction is processed, and the detailed data is available for the agency Basically the merchant or supplier invoices The buyer which is your agency approves the payment The payment is authorized And the funds are transferred Does your agency deal with complex invoicing processes with large vendors or large dollar values? Invoicing for these types of products or services can be very complex and time consuming Although complex, the opportunity for increased refunds is very great give the dollar value of these types of transactions Buyer initiated payments and ePayable solutions offered under the GSA Smart Pay master contract may be a potential solution that allows an agency to control the frequency of payments to the vendor while simultaneously streamlining payment processes and reducing operational costs Like supplier initiated payments, buyer initiated payments require the agency and contractor bank to work with a vendor to get them enrolled in the buyer initiated payments program Once enrolled, your agency will be able to initiate purchasing supplies from the vendor through the EAS and will provide payment once supplies are received The agency controls the frequency of purchases and payments to the vendor The solution is beneficial when you have more frequent back and forth purchasing and payments to a single vendor which may add up to a larger dollar value One practical use example might be a federal agency that requires ongoing purchasing of lab supplies and equipment who have a contractual agreement in place with a single vendor for those items Instead of initiating a new financial document for every purchase, the agency establishes a buyer initiated payment relationship with the vendor by enrolling them in the program with the assistance of their contractor bank and their contracting office Now the agency can request lab supplies as frequently as needed through the EAS, receive the supplies from the vendor, and make the payment directly to the vendor through the EAS This saves the agency and the vendor time and money by streamlining the purchase and payment processes [Inaudible] processing is an automated payment transaction processing service where the agency sends the payment file directly to the merchant’s acquiring institution which is the financial institution that the merchant utilizes for their business The networks which are Visa or MasterCard process the payment automatically on behalf of the agency and the GSA Smart Pay contractor bank, and deposit the funds directly in to the merchant’s bank account This is offered as a tier two solution under the GSA Smart Pay three master contract This means that the bank has the option to provide it to the agencies It is available for all business lines Note that you should make sure you check your agency’s task order to see if it has been included as an option for you This strategic payment solution is fairly new in the commercial industry, and is continuing to evolve This chart provides you with a visual flow of how straight through processing would work In a straight through processing transaction, the agency makes the transaction and sends payment instructions to their bank which authorizes the payment Then the payment service provider, in this case Visa or MasterCard, validates the payment Next the supplier [inaudible] authorizes and confirms receipt of the payment, and sends a notification back to Visa or MasterCard Finally the bank confirms payment and lets the agency know This chart looks great, but how can my agency benefit? The biggest [inaudible] is that there is no [inaudible] for anyone including your agency This process is completely automated, and doesn’t require any manual input from the agency It’s seamless

STP works well in situations [inaudible] consistent over time For example, let’s say you have a fixed price contract in place for consulting services to a small business You pay the exact same amount monthly You could set up an STP process to send that exact same amount to the vendor monthly without having to do any manual intervention You could simply check each month on the date of payment that the amount was sent to the business STP can also help your agency pay small businesses more quickly compared to traditional payment setups This is a great way to attract small businesses, and meet your small business goals As always, ensure that you review your agency’s policy regarding invoicing and payment before implementing STP or any strategic payment solution EPayable solutions are continually evolving within the payment sector As ePayables become more available commercially, there will be more opportunities for agencies to expand their programs and utilize these solutions The agency should review the GSA Smart Pay master contract thoroughly to understand the functionality and the pricing related to ePayables offerings And also communicate with their GSA Smart Pay contractor bank to learn more about the specific ePayables currently offered For example, supplier initiated payments are a tier one offering which means that they are all awarded Contractor banks must make it available to the agencies The other two ePayables offerings, straight through processing and buyer initiated payments, however are tier two offerings This means that your contractor bank may or may not currently offer them under the master contract or your agency task order Now that you have a better understanding of the wide variety of offerings, your next step should be to take a look at payment areas within your agency where you can capture additional spend through the program Ways that you can dive deeper in to reviewing the potential opportunities include the GSA Smart Pay savings calculator Our office has developed a savings calculator that allows agencies to put theoretical spend in to various categories in order to assess potential increased refund opportunities The GSA Smart Pay savings calculator is designed to enhance and support leadership payment decision making by visualizing the benefits of utilizing GSA Smart Pay payment products in the areas of contracts, grants, and local travel subsidy spend The tool provides estimates for potential savings [inaudible] on increased utilization of the program An AP file review or accounts payable file review is a process where the GSA Smart Pay contractor bank reviews an agency’s payment files in order to find potential areas where payment solutions can be leveraged In order to receive an AP file review, your agency must provide financial and payment information to the GSA Smart Pay contractor bank The bank will then provide a full report outlining areas where your agency may be able to capture additional spend through your program or gain efficiencies by utilizing offered strategic payment solutions Your agency can utilize this information and work with the bank to implement new payment strategies within your program Did you know that an average — on average the federal government spends approximately $560 billion in contract payments annually? Imagine if you moved just a portion of that spend to a GSA Smart Pay strategic payment solution Contract payments is one of the largest areas of opportunities to move payment, and greatly increase your agency’s refund Now that you’ve learned all of the available payment solutions products under the GSA Smart Pay three master contract, you may have additional questions in those areas, and I’m happy to take those questions at the end of this presentation I’ve included some links that will assist you as you review and as you start to look in to the potential offerings that we have available for your program And, as always, if you have any questions, you can always contact our GSA Smart Pay customer support hotline or you can contact me directly at joline.mcdonald@gsa.gov Thank you so much for attending this presentation, and I hope you enjoy the rest of your forum