B2B Payments

Federal P-Card Program Looks Toward The Future

There are still three years remaining on the current contracts for SmartPay, the federal card program that covers purchase, fleet, travel and integrated charge cards. But the U.S. General Services Administration (GSA), the agency that oversees the program, is already planning for the next iteration of the program.

Designing and implementing new features for the world’s largest government charge card program, which is used by 350 agencies, doesn’t happen overnight. David Shea, director of the office of charge card management for GSA’s Federal Acquisition Service, told Business Travel News the agency is in the beginning stages of requesting proposals from banks interested in receiving the next round of contracts. It is a lengthy process. Once the bank suppliers for the third iteration of the SmartPay program are selected, an 18-month “transitional performance period” begins, where the selected banks can pursue the business of individual agencies. Choosing the right suppliers is critical for the agencies and banks. Contracts are approved for 10 years.

Two of SmartPay’s current banking partners, Citibank and U.S. Bank, have been a part of the program since it was introduced in 1998. The third, JPMorgan Chase, joined the second iteration of SmartPay in 2008. Citibank maintains the largest portfolio of accounts, according to Shea, after winning the sizable travel contract of the Department of Defense. It is up to each individual agency to award their business to any of the contracted banks.

For the 2014 fiscal year, which ended Sept. 30, 2014, the more than 3 million SmartPay cardholders spent $26.4 billion, a slight increase in spending from $26 billion the previous year. P-cards make up the highest-spend category of the program, responsible for $17.1 billion of the total spend. Travel cards are the most widely used, the 2.4 million cardholders generated more than 37 million transactions last year. Fleet cards make up the smallest segment, with approximately 608,000 cardholders. Spending remained flat for 2014 at $2.2 billion.

The payments industry has seen new products enter the market since the last round of contracts was awarded in 2008. Although SmartPay is defined by lengthy contracts, the GSA is still concerned with innovation. Mobile payments, electronic wallets, improved analytics and reporting are becoming increasingly more common industry-wide. The SmartPay program is working to keep up. Cardless virtual accounts and electronic invoicing were added to the program in June 2014 to help address changing purchasing and payment habits. In February, the White House approved the use of Apple Pay for federal payments cards, including those under the SmartPay program. At the moment, none of the contracted banks have enabled the service, but the agency has said it would consider using Apple Pay if one of its banking partners made the service available.

Security is a major concern. The GSA is required by federal law to comply with the Federal Information Security Management Act, which ensures the security of digital data. The agency is also moving toward chip-and-PIN cards following President Barack Obama’s October 2014 executive order to improve the security of consumer transactions. In January, the GSA announced the rollout of the more secure cards and expects to issue more than 1 million by the end of the year, even as merchants aren’t yet prepared to accept chip-and-PIN cards.

The existing contracts for SmartPay won’t reach the end of their 10-year term until November 2018, but the GSA is using the extra time to navigate the added requirements of government. “Even though these are commercial contracts, we have some measure of government-specific requirements we have to meet because we are the government and we do a lot of things differently,” Shea told Business Travel News.

Few additional details of the next generation SmartPay program have been revealed, but Shea did share that the information-finding stage would end Jan. 20, 2016. The government, like any other corporation large or small, is looking for ways to navigate the constantly changing payments landscape.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.

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