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Agency/Organization Program Coordinators (A/OPCs) Purchase Training

Lesson 3: Purchase Card/Account Use and Payment Solutions

What can card/account holders buy using their GSA SmartPay® Purchase card/account?

It is important for card/account holders to understand the limits on purchase card/account use and to manage their purchases against those limits.

Card/account holders are allowed to purchase any commercially available supply or service not prohibited by either federal or agency-specific procurement regulations. To find out their agency-specific procurement requirements regarding purchase amounts, receipt documentation, and approvals, card/account holders should contact their agency/organization program coordinator (A/OPC) or contracting officer. An approval may be required prior to purchase and may be needed in conjunction with a subsequent review of the purchase activity. If a purchase appears questionable, card/account holders can reach out to their A/OPC or contracting office.

What are some of the strategic payment solutions offered under GSA SmartPay 3?

Strategic payment solutions provide agencies/organizations with increased payment flexibilities and strategies for making payments.

Strategic payment solutions offered under the GSA SmartPay 3 Master Contract include:


  • Replaces the accounts payables process such that electronic transactions take place directly between the government and the supplier.
  • Typically used with merchants who are traditionally paid by convenience check or electronic funds transfer (EFT) and do not accept charge card payments.
  • Examples include straight-through processing, buyer-initiated payments, supplier-initiated payments, procure-to-pay and other card-not-present solutions.

Mobile Application

  • Provides the ability to access the Electronic Access System (EAS), pay invoices, receive text/email alerts and view statement and payment information over a mobile device.
  • Upon request, your contractor bank provides mobile application capabilities at no additional cost.

Mobile Payments

  • Your contractor bank provides the ability for card/account holders to make secure payments using a mobile device at the point-of-sale (POS).

Net Billing

  • The process of ensuring that merchant discounts or refunds offered are deducted at the POS and guaranteeing such discount arrangements.
  • The contractor bank ensures that discount information is identified on the invoice and passed to the agency/organization, when available.
  • For example: If Mark purchased a toner cartridge for $100 and the merchant offers a government discount of $4.00 to the agency/organization based on existing agreements, the contractor bank shall net bill only $96 for the transaction.

Single-Use Account (SUAs)

  • Leverages a single virtual account number for each payment.
  • The limit on each account is set to the specific payment amount.
  • Internal controls such as Merchant Category Code (MCC) blocks, spend limits, timeframes and account expiration dates can be used for increased control.
  • Agencies also have the ability to append accounting data for seamless reconciliation.
  • Examples of use include invoice and contract payments, which help to ensure that merchants are not able to charge more than approved amounts.
  • Benefits include:
    • Accounts can be activated in real time.
    • Controls can be placed on account, allowing for increased oversight of spend
    • Disposable, one-time use account numbers reduce the risk of fraud.
    • Seamless reconciliation.
    • Reduces the necessity for using convenience checks.


  • Use of a secure, unique “token” in place of a 16-digit account number to provide extra security for transactions.

Virtual Cards

  • One-time use account numbers that may be used during a limited time, for a limited amount and possibly for a specific merchant.

Declining Balance Cards

  • Can be applied for a specific purpose, a finite balance or for a specified time period.
  • Credit limits can either be reset as needed or the card becomes inactive once the balance is used.
  • Easily loaded and distributed to employees in case of emergency or disaster situations.
  • Benefits may include:
    • Financial flexibility and security.
    • Reduction of agency/organization administrative fees.
    • A flexible option for applicants who cannot be issued a traditional card/account.
    • Safe and excellent alternative to cash and paper checks.

Ghost Cards

  • For agencies who frequently do business with one merchant and have recurring payments.
  • An account number can be assigned to the merchant and authorized agency personnel transactions occur without having to use multiple cards or accounts.
  • Many agencies use this product for purchases such as airline tickets.
  • Benefits may include:
    • Reduced number of open accounts (payment processing and oversight easier).
    • Allows for multiple users.
    • Allows for a high level of control.
    • Reduces the risk of lost or stolen cards.

What is Section 889 and how does it apply to purchases?

Section 889 of the John S. McCain National Defense Authorization Act (NDAA) for Fiscal Year 2019 (P.L. 115-232 [PDF, 789 pages]) and the Federal Acquisition Regulation (FAR) Case 2018-017 prohibit the purchase of covered telecommunications equipment and services from merchants who sell products containing spyware. These devices could pose a threat to U.S. security by spying on or disrupting communications within the U.S. Therefore, purchase card/account holders should follow their agency’s policy regarding Section 889 compliance.

What are convenience checks?

Some agencies allow for the use of convenience checks.

Convenience checks are:

  • A contractor-provided instrument that is written, dated and signed against an account within established dollar limits.
  • Intended only for the use with merchants that do not accept the GSA SmartPay Purchase card/account.
  • A payment method of last resort, only when no reasonable alternative merchant is available who accepts the GSA SmartPay Purchase card/account.

If your agency/organization determines a need for convenience checks, your contractor bank will provide a supply of checks to the designated card/account holder drawn on the card/account holder’s purchase card/account. The checks will be processed as they are presented for payment.

Convenience checks are multi-copied (one copy for the card/account holder’s records and the original copy for the merchant). Due to the increased potential of fraud and abuse, specialized training on convenience checks is required prior to being authorized to write checks. If any misuse or abuse is discovered, the employee will lose convenience check and purchase card/account privileges. That employee will then be referred for disciplinary action in accordance with agency procedure.

Convenience checks may not be written for purchases above the maximum dollar limit established by your agency. In addition, convenience checks may not be written to:

  • Merchants who accept the GSA SmartPay Purchase card/account.
  • Merchant transactions already under another method of acquisition (purchase orders, contracts, etc.).
  • Employee reimbursements.
  • Cash advances.
  • Salary payments, cash awards, or any transaction processed through the payroll system.
  • Travel-related transportation tickets.
  • Meals or lodging related to employee travel except as related to emergency incident response.
  • Other restrictions as determined by agency policy.

Checks must be used in sequential order. Each convenience check must be entered in a check register or log for tracking purposes. The following information must be written on each check:

  • Date the check is being issued.
  • The name of the payee.
  • Amount of the check.
  • An original signature.

When a convenience check is used to purchase services, the Internal Revenue Service (IRS) requires the collection of that information, so that it can be reported as income to the IRS. If a person is “engaged in a trade or business and, in the course of that trade or business, pays any person $600 or more of rent, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable gains, profits and income during a calendar year, [IRS] Code Section 6041 generally requires them to file an information return with the IRS and to furnish an information statement to the payee.”

The IRS states that agencies may rely on the merchant category code (MCC) in determining whether a transaction is subject to Form 1099 reporting. Failure to file a correct information return (Form 1099) by the due date may result in a penalty imposed by the IRS.

What are Government-to-Government transactions?

Government-to-government — also referred to as “intra-governmental” — transactions are payments between government entities, including within the same agency. These transactions may be classified under Merchant Category Code 9399, Miscellaneous Government Services.

Effective October 1, 2022, the following apply:

  • The inter-governmental transaction card limit is $9,999.99, meaning no individual card transaction can exceed this limit.
  • The maximum daily limit from a single payor is $24,999.99.
  • Total monthly transactions, based on a 30 day rolling period, from a single payor can be no more than $100,000.00.

The government’s card acceptance policies can be found in Treasury Financial Manual (TFM) Vol. I, Part 5, Chapter 7000. It also addresses limitations on credit card transactions. Additionally, consider the following:

  • Customers cannot divide transactions into smaller pieces to evade these limits.
  • Treasury retains the option to change limits. One goal is to reduce the fees the government pays when it accepts the purchase card/account for large transactions.

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