Rescinded [2009-10-01] - Accepting Credit Cards as Means of Payment for Goods and Services Provided by the Government - TB Circular 1987-18

CIRCULAR NO.: 1987-18

T.B. MINUTE: 804875

FILE NO.: 4110-05

DATE: April 15, 1987

TO: Deputy Heads of Departments, and Heads of Agencies and Departmental Coporations

SUBJECT: Accepting Credit Cards as Means of Payment for Goods and Services Provided by the Government

1. This circular is to inform departments and agencies of amendments to the policy and procedures covering the acceptance of credit cards as a means of payment for government goods and services.

2. This circular sets out the consequent changes to Section 10.5 of the Guide on Financial Administration "Claiming of Revenue and Receipts".

3. This circular applies to "departments" as defined in Section 2 of the Financial Administration Act (FAA).

4. In 1980, the Treasury Board (TB) adopted a policy that introduced the acceptance of credit cards issued by financial institutions as a means of receiving immediate payment for government goods and services. Until recently, the policy had been implemented by some departments on a limited scale under individual agreements subject to various "merchant fee" rates. However, many departments are now considering accepting credit cards as a way of expediting increased revenues from cost recovery and revenue generation activities. To this end, interim agreements that were approved by the Office of the Comptroller General of Canada (OCG) are being replaced by standard, government-wide Master Agreements, reflecting the principles below.

5. An assessment conducted by the OCG in May, 1985 revealed that broader acceptance of credit cards would provide significant cash management benefits including:

• earlier cash inflows to the Consolidated Revenue Fund and cost reductions realized through:
  • earlier receipt of payments,
  • reduction of workload and expense of credit functions, and
  • reduction of uncollectable accounts receivable;
• increased convenience and ease of payment for the public;
• immediate and exact settlement of foreign sales in Canadian currency; and
• opportunity for increased sales.

6. The following amendments to TB policy and procedures are intended to:

• permit centralized negotiations of Master Agreements in order to obtain the best uniform service charge (i.e. "merchant fees"); and
• avoid duplication in setting up and implementing credit card acceptance arrangements and procedures.

7. Because of the wide variety of activities that result in payments to the government, each department to whom the policy applies will determine where accepting credit cards is appropriate to its particular circumstances. Credit card acceptance is not mandatory.

8. In deciding whether to accept credit cards, departments shall ensure that potential applications are justified in light of the cash management gains, administrative costs, and service charges involved.

9. In accordance with the Master Agreements, departments shall not discriminate as to rates, services or other conditions with respect to any transaction in which a charge card is used. Departments shall ensure, however, that costs associated with accepting credit cards are built into the general rate structure and allocated uniformly to all customers or clients.

10. Those credit card systems that satisfy applicable governmental cash management objectives and TB policy may be used. Currently, only Visa and Mastercard meet such criteria. To ensure maximum convenience to the public and optimize revenue generation, cards of both of these systems will be accepted where credit card acceptance is implemented.

11. The procurement of any equipment related to credit cards (including manual imprinters as well as point-of-sale terminals), shall not be part of any Master Agreement or any addenda thereto. Departments should assess the cost-effectiveness of purchasing or renting such equipment, which shall be acquired through normal procurement channels and meet the standards established by the Receiver General. Where warranted by high volumes of sales and transactions as well as other operational considerations (e.g. speed of operations and productivity factors) departments should consider the use of electronic point-of-sale terminals.

12. No fee, charge, refund or adjustment related to a credit card transaction shall be paid out of public money to be deposited to the credit of the Receiver General (e.g. credit card sales vouchers presented to a financial institution by a department for such credit) or by any means other than in accordance with the Payment Requisitioning Regulations, the Receipt and Deposit of Public Money Regulations and the Cheque Issue Regulations.

13. Credit Notes and Credit Slips, which are recognized by the TB as payment instruments under section 28(1) of the FAA, shall be the normal means of effecting refunds and adjustments on credit card transactions. Credit Notes and Credit Slips shall be issued in accordance with the same principles as outlined in the policy on "Non-Cash Credits and Adjustments" in section 10.5 of the Guide on Financial Administration, and the Repayment of Receipts Regulations. In addition, as payment instruments, they must be authorized pursuant to section 26 of the FAA. Departments shall also remind issuers of Credit Notes and Credit Slips of the importance of showing the correct effective date to ensure that the Card-holder receives proper credit.

14. The above Master Agreements apply to all government applications for credit card acceptance. Where required, terms and conditions unique to a particular department and commensurate with TB policy will be introduced as addenda to these agreements.

15. Subject to applicable TB policy and guidelines, the RG will conduct the necessary negotiations and execute the ensuing agreements and addenda for credit card acceptance arrangements. Departments shall deal exclusively through the RG, who will assist them in implementing the necessary arrangements and who may issue directives specifying operational procedures to be followed.

16. For the purpose of charging for their services, the financial institutions have agreed to treat all departments to whom this policy applies as one customer. Except for specific charges for special requirements that shall be paid separately by the department, the service charge for all credit card transactions will be calculated using the uniform rate as stated in the interim or Master Agreement that applied at the time the transaction was effected. These standard service charges will be billed to and, effective April 1, 1987, paid by the RG monthly, and charged to the appropriation voted to the RG to compensate financial institutions for banking services provided. The RG is also responsible for the reconciliation, accounting and monitoring of the accuracy of these charges, and for providing sufficient data to departments and agencies for internal accounting, reconciliation and monitoring purposes.

17. Because of the government-wide cost implications, the OCG (Cash Management Directorate) will evaluate the effectiveness of this policy on a continuing basis.

18. Enquiries about the operational aspects of these arrangements should be directed to the:

19. Enquiries concerning this circular should be directed to the:

J.A. Macdonald,
Deputy Comptroller General,
Policy Development Branch.