OLYMPIA – Public agencies in Washington could receive about $8.4 million in annual rebates by using charge cards available through a contract recently awarded by Enterprise Services.

U.S. Bank is the winning vendor of the new charge card services contract. The new agreement expands on the bank's previous contract — in place since 2008.

Under the contract, U.S. Bank offers a quarterly rebate to agencies that use the charge cards. Rebate amounts are based on how much is spent and how quickly the bill is paid.

Washington public agencies received more than $3 million in charge card rebates from the bank in 2012 and more than $9 million since 2008. Rebate totals for 2013 will be released later this month.

The new contract offers larger rebates than the old one because U. S. Bank has raised the basis point used for calculating how much money to return to an agency.

The estimated rebates are based on past usage of state-issued charge cards. There are many variables that influence rebate amounts.

Washington was the lead state in the development of this contract on behalf of the WSCA-NASPO Cooperative Purchasing Organization, a national purchasing cooperative. The new contract is available for use by public agencies in all 50 states and the District of Columbia.

State-issued charge cards unlike personal credit cards

The contract includes several types of charge cards but the purchasing card – a Visa card – is the one most frequently used by agencies to buy goods and services.

Unlike a personal credit card where the cardholder can pay only a portion of the amount due, public agencies must pay the entire balance in full each month.

U.S. Bank regularly works with its clients to help them prevent fraud and misuse. The bank has a number of tools that look for and detect transactions that are outside of an organization's policy.

Agencies add additional levels of fraud protection and security. For example, agencies must establish authorization controls for each card, which includes limits on the types of purchases, dollar limits per transaction and more. Every card user must sign an agreement that they will comply with all agency purchasing policies and procedures.

New fleet cards now earn rebates, too

Another reason for the larger rebates is the addition of U.S. Bank fleet card to the contract. The U.S. Bank fleet card, like the purchasing card, offers rebates to users. The previous fleet card contract did not offer rebates.

The fleet card is used by employees who use state-owned vehicles for travel. It is used to pay for fuel, maintenance and roadside assistance costs.

Benefits beyond rebates

Using charge cards to buy goods and services helps public agencies better manage their purchasing processes, while improving efficiency and transparency. In addition to receiving rebates, benefits include:

• Lower administrative costs since agencies can issue one payment per month to cover all purchases instead of processing multiple purchase orders and payments.
• Better security because transactions can be monitored online almost immediately, rather than waiting for end-of-month invoices.
• Quicker payments to suppliers. Agencies typically pay bills 30 days after the purchase of the item or service. Cards allow for immediate payment. This can help businesses, especially smaller ones, with cash flow and credit.

"We are pleased to have earned this opportunity to renew and expand our offerings to the public sector," said Richard Raffetto, head of Public Sector and Financial Institutions for U.S. Bank's Wholesale Banking Division. "We are eager to put our payment expertise to work helping public-sector organizations and educational institutions operate more efficiently and improve stewardship of their financial resources."

About the WSCA-NASPO Cooperative Purchasing Organization

The new charge card services contract was awarded through the WSCA-NASPO Cooperative Purchasing Organization, the cooperative purchasing arm of the National Association of State Procurement Officials (NASPO). WSCA-NASPO leverages the collective demand of public and educational entities to procure goods and services. It follows a "lead state" operating model, in which one state manages the solicitation and awards the contract through which other entities get access to the products and pricing.

Enterprise Services, on behalf of the state of Washington, managed the solicitation and will administer the new contract.

The new contract has a five-year term with the option to be renewed for two additional years. It will be phased into use.