OAS IL-19-01 (Extended) Use of Third Party Payment Processors

  • Posted Date: 06/12/2019
  • Status: Validated
  • Outdated on: 11/12/2022


             Washington, DC  20405


OAS IL-19-01, Extended

June 12, 2019; Extended on May 4, 2020; Extended for 6 months on June 8, 2021; Extended for 6 months on January 24, 2022; Extended for 6 months on June 27, 2022




SUBJECT:  Use of Third Party Payment Processors

1.  Purpose. This Instructional Letter (IL) provides guidance to cardholders who are doing business with merchants that use third party payment processors to process payment for purchases on the General Services Administration (GSA) SmartPay® purchase card.

2.  Background. Third party payment processors such as PayPal®, Amazon Pay, and Square® offer e-commerce/internet payment solutions for commercial transactions. The processors own merchant accounts that allow them to accept and process charge card orders on behalf of other vendors. These orders are generally considered high risk transactions because they are susceptible to fraud and/or misuse. However, the GSA Center for Charge Card Management (CCCM) has determined that if a merchant is well known, or there is prior purchase history with the merchant, such merchants using third party payment methods are generally safe (GSA SmartPay Third Party Payment Processors- Smart Bulletin No. 023).  As a result, the GSA Office of Administrative Services (OAS) is allowing the use of third party payment processors with some stipulations.   

3.  Scope and Applicability. This IL applies to all GSA cardholders and to the Office of Inspector General (OIG) to the extent it does not conflict with other OIG policies or the OIG mission. The implementation of this IL is effective immediately.

4.  Policy and Procedures. Cardholders can do business with merchants who use third party payment processors. However, they must comply with the following procedures:

     a.  Cardholders shall not establish a third party payment processor account (i.e., PayPal®, Amazon Pay, or Square®) to make a purchase with the GSA purchase card.

          (1)  When making an on-line or store purchase, cardholders shall always select the Mastercard logo or credit card as the option for payment.

          (2)  Cardholders shall not select the third party processor as an option for payment.

     b.  Cardholders shall not establish and/or agree to commercial terms and conditions without consent from the GSA Office of General Counsel (OGC).

     c.  Cardholders shall not use their own or personal third party payment processor account to make a purchase with the GSA purchase card.

     d.  Cardholders shall ensure that GSA does not incur a fee when payment on the purchase card is processed by a third party payment processor. As a result, cardholders shall review the receipt to verify that the correct amount was charged on the GSA purchase card.  If there is a discrepancy, cardholders shall immediately contact the merchant to obtain a credit for the fee. 

     e.  Cardholders are required to read and thoroughly understand the third party payment processors dispute policy prior to making a purchase, if possible, because the dispute process may differ greatly from the U.S. Bank dispute process. Cardholders are responsible for charges on the GSA purchase card as outlined in GSA Order, OAS 4200.1B CHGE1 Management and Use of the GSA SmartPay® Purchase Card, par 39b.

Paragraph 4(f) is cancelled by OAS on June 8, 2021.

     f.  Cardholders must ensure that vendor is set up in Pegasys when third party payment processor is used. In instances where CCVend is used for one-time purchase, cardholders have to amend the log to reflect the vendor’s name. Users can request new vendors be added to Pegasys by completing the electronic form located on the Finance Webpage https://finance.ocfo.gsa.gov/VendorRequest/co/Stepd.aspx.

5.  Responsibilities. OAS will monitor and ensure cardholders follow these procedures. In the event of a violation, OAS will suspend the cardholder’s purchase card for one year. As a reminder, all purchases on the GSA purchase card must be logged and required documents uploaded in Pegasys as addressed in OAS 4200.1B, CHGE1, par 37- 38.

6.  Contact Information. If you have any questions regarding this IL, please contact your respective Regional Purchase Card Coordinator.

7.  Signature



Chief Administrative Services Officer
Office of Administrative Services


Last Reviewed: 2022-06-27