Interchange Settlement Could Affect Merchants Involved in State Procurement Programs 

Sept. 17, 2012

Depending on the final resolution of the interchange settlement proposal now working its way through the legal process, state procurement programs could be negatively affected, according to an issue brief from the National Association of State Procurement Officials (NAPSO). Merchants that act as vendors to state governments could see state procurement contracts altered if it becomes more expensive to use credit cards in the face of surcharges (which would be permitted for merchants according to the current terms of the settlement), the brief said.

NAPSO urges state governments to begin considering how credit card purchases for procurement could change if the settlement is approved.

Vendors seeking alternative forms of payment as a result of the settlement may drive down the sales volume of procurement cards. States may consider adding language to standard bid templates asking if merchants surcharge for credit card payment and to alter contracts to incentivize merchants not to surcharge. NAPSO also warns merchants that if the settlement pushes states away from using procurement cards it could lengthen the time states take to pay (24-72 hours for credit cards vs. up to 30-60 days for checks). For NAPSO’s full take on the matter and more ways the interchange settlement could affect state procurement programs and their vendors, download the full brief .