Rescinded [2009-10-01] - Acceptance of credit cards as means of payment for goods and services provided by the Government

DATE: December 18, 2006

TO: Senior Financial Officers

Cc: Senior Full-Time Financial Officers (SFFO)

SUBJECT: Acceptance of credit cards as means of payment for goods and services provided by the Government

The purpose of this notice is to inform you that effective April 1, 2007 Public Works and Government Services Canada (PWGSC) will be recovering bank charges from Departments and Agencies for credit card transactions exceeding a certain threshold. PWGSC will set the initial threshold at $5,000.

Currently, departments accept credit card payments for a wide variety of activities, some of which result in the acceptance of large value transactions. PWGSC currently pays all merchant discount fees related to these transactions. The merchant discount fee is a percentage of the value of the transaction. For large value transactions, this fee is significant, particularly when compared to the cost of accepting a cheque or another form of payment such as a bank transfer.

TB Circular 1987-18 - Accepting Credit Cards as Means of Payment for Goods and Services Provided by the Government facilitates the use of credit cards for payments to the government while maintaining due regard for the requirements of good management practices and the stewardship of public money. While the circular does not specify a dollar limit on credit card acceptance, it does require departments to ensure that potential applications are justified in light of the cash management gains, administrative costs, and service charges involved.

The merchant discount fees will continue to be absorbed by PWGSC for all transactions under $5,000. Departments and agencies will be required to absorb the fees for transactions exceeding $5,000. PWGSC will continue paying merchant discount fees to the suppliers and will then recover these from each department for credit card sales greater than $5,000 from departments on a periodic basis to be determined (monthly or quarterly) through an interdepartmental settlement.

We therefore ask you to review your internal processes carefully to ensure that these transactions are justified in light of the cash management gains, administrative costs, and service charges involved. Alternatives such as payment by debit card, cheque or bank transfers should be examined in order to reduce these charges where possible. It is also important to outline that many private sector organizations and other levels of government limit amounts accepted/paid for by credit cards, to minimize the banking fees and to ensure sound cash management practices.

Please note that prior to determining if credit cards should be accepted as means of payment for large value transaction, an analysis of benefits and costs must be performed.

Please contact Steve Lacelle, Director, Banking Arrangements at (819) 956-2945 or by e-mail at steve.lacelle@pwgsc.gc.ca should you require additional information.

John Morgan
Assistant Comptroller General
Financial Management and Analysis Sector
Office of the Comptroller General

Renée Jolicoeur
Assistant Deputy Minister
Accounting, Banking and Compensation
Public Works and Government Services Canada