A government purchase card turns a small buy into a same-day transaction. The cardholder is a federal employee with a card, a spending limit and a set of rules. What the cardholder can actually do depends on what the vendor provides. A vendor that does not fit those rules costs the cardholder a returned order or an audit finding.
This is the list we would hand a supplier who is new to selling to cardholders. It is written for the cardholder and the supplier at once, because each has to hold up their side. Card rules also vary by agency, so treat this as general guidance and check the agency's own policy.
What the cardholder needs to know first
Government purchase cards run under the GSA SmartPay program, and smartpay.gsa.gov publishes guidance, training and merchant information. The cardholder's authority to buy is limited: a per-transaction limit, a monthly limit and, for most purchases, the micro-purchase threshold. We cover the current figure in the micro-purchase threshold. Buys above it generally need a different procedure and a contracting officer.
So the vendor does not need to teach the cardholder the rules. The vendor needs to make each rule easy to follow.
1. A single, all-inclusive delivered price
The cardholder should be able to see the full cost before approving: unit price, quantity, extended price and everything else, delivered. A quote that adds shipping, handling, fuel or setup fees after the fact is the usual cause of a declined transaction or a corrected order.
State the price as delivered to the named address, and say whether freight is included. If a fee applies, list it as its own line so the cardholder is not surprised on the receipt. Our guide to what a complete supply quote includes covers the full set.
2. Say whether you accept the card, and what it costs
Suppliers should state whether they accept the card. Do not make the cardholder find out at checkout.
Surcharges are the sensitive point. GSA's Smart Bulletin 017 explains that, following a 2013 settlement, merchants in the United States may add a surcharge for card payments in some cases. It lists limits: the surcharge cannot exceed the merchant's cost of accepting the card, cannot exceed 4 percent in any state, must be posted clearly, and must appear as its own line on the receipt. Some states do not allow surcharges at all, and the bulletin notes that state rules vary. A cardholder may choose another merchant to avoid one. Check the current bulletin and your state's rules before you add any card fee, and check the terms of any contract vehicle you sell on, since some vehicles expect processing costs to be built into the price.
The simplest approach for a supplier is to price so that no surcharge is needed and say so.
3. No sales tax on a federal purchase
The cardholder should not pay sales tax on a federal purchase. The federal government is generally immune from state and local taxation of its own purchases (see FAR 29.302), and GSA says purchase cards are centrally billed accounts that are exempt from state sales tax in all states. The cardholder may need to give the vendor documentation, and states set their own documentation rules.
Some states tax the seller's gross receipts instead of taxing the buyer's purchase. GSA notes that a merchant may pass that tax on or absorb it. If a tax line appears, the cardholder should ask what it is. We cover the supplier side in federal tax exemption from the supplier's view.
4. A receipt with line detail
Cardholders reconcile every transaction, and an approving official reviews them. A receipt that says "merchandise, $412.00" does not help. The vendor should provide:
- The vendor's name and address.
- The date of purchase and the order number.
- Each item with description, quantity and unit price.
- Shipping or other charges as separate lines.
- Any tax, and what it is, if tax appears at all.
- The total charged to the card.
A packing slip should match the receipt. If the cardholder cannot match what arrived to what was charged, the purchase gets questioned later.
5. The Section 889 representation
Section 889 of the fiscal year 2019 National Defense Authorization Act restricts federal buying of certain covered telecommunications and video surveillance equipment and services. Buyers get representations from suppliers, and a supplier that sells electronics should be ready to give a clear answer. The solicitation or order may incorporate the representation by clause, and the supplier's annual representations in SAM may cover it, but a cardholder buying a camera, a phone or a networking device should not have to guess. We explain what to state and how in the Section 889 supplier certification.
6. No split purchases
Splitting a requirement into several small buys to stay under a limit is prohibited. FAR 13.003(c)(2) says not to break down requirements that aggregate more than the simplified acquisition threshold, or the micro-purchase threshold, into several purchases that fall below the threshold merely to use simplified procedures or to avoid requirements that apply above the micro-purchase threshold.
Vendors can help here without playing policeman. If a cardholder places three orders for the same item type in one day that together exceed the limit, the vendor should raise it, or at least not suggest splitting as a workaround. The cardholder owns the compliance, but a vendor who proposes the split is a bad partner.
7. Delivery, acceptance and warranty paperwork
The card is charged when the order is placed or shipped, but the cardholder is still responsible for confirming receipt. Send tracking when the order ships, label partial shipments as partial, and include warranty information with the delivery. If something arrives wrong, the cardholder needs a clear path: who to call and what the replacement process is.
What a cardholder should look for in a vendor
Before you place the order, ask the vendor:
- Is the price delivered, and does it include everything?
- Do you accept the card, and is there any added fee?
- Will sales tax appear on the invoice or receipt?
- What will the receipt show?
- Can you give me your Section 889 representation?
- Who is my one contact if something goes wrong?
A vendor that answers all six quickly will not slow you down.
How Lunula Supply handles it
We confirm every order line by line in writing, raise mismatches on day one, and verify availability of the exact item before we ship. We quote a delivered price, send country of origin and representations with the quote, and keep one contact from acknowledgment through warranty. We accept payment however the order specifies. Suppliers should state whether they accept the card, and cardholders should ask.
Have a small order to place? Send us the requirement or see what we supply.
Frequently asked questions
Can a vendor add a surcharge when a government cardholder pays by card?
Sometimes. GSA's guidance says merchants in the United States may add a limited surcharge in some cases, but it must be capped, posted and shown as its own receipt line, and some states do not allow surcharges. A cardholder can choose another merchant to avoid one. Check the current bulletin and your state's law.
Should a purchase card order include sales tax?
No, a federal purchase card order should generally not include state sales tax, because purchase cards are centrally billed accounts that GSA says are exempt in all states. A few states tax the seller's gross receipts instead, which may show up as a charge. Ask what the line is.
What is purchase splitting?
It is breaking one requirement into several smaller buys to stay under a spending limit. FAR 13.003(c)(2) prohibits breaking down a requirement merely to use simplified procedures or avoid requirements that apply above the micro-purchase threshold.
Do I have to accept the government purchase card to sell to an agency?
No. Suppliers should state whether they accept it, but many orders can be paid other ways, depending on the order. Say which up front so the cardholder is not surprised.
General information, not legal advice. References were checked against acquisition.gov and smartpay.gsa.gov on the publish date. Agency card policy and your order's terms control.