Credit cards have revolutionized payments, allowing for faster, more convenient transactions. Purchase cards are just like your credit card – but are tailor made for government use. Because of the numerous benefits purchase cards offer, they are the preferred payment method for state and local governments. The U.S. Government Accountability Office, Congress’s watchdog, has extensively studied the benefits purchase cards provide to government agencies, finding that they lower administrative costs, generate income from rebates, and help agencies manage payments.
In West Virginia, state and local purchasing cards are used by employees at our state agencies and nearly 400 local governments, boards, and commissions to purchase a wide variety of goods and services, amounting to nearly $695.4 million in transactions in fiscal year 2023. In West Virginia, our Purchase Card Program has generated between $27 million and $157.1 million in cost avoidance, representing very real savings to our taxpayers. While credit cards generate points and rewards for cardholders – state governments receive cash rebates for the large volume of goods and services we purchase. In fact, in the last seven years, over $69.5 million in rebates have been collected and dispersed to state and local governments in West Virgina. As a direct result of the savings and revenue generated by state and local employees using credit cards for government purchases, West Virginians are provided additional public services without needing to pay higher taxes. Moreover, by negating the need for state and local government employees to use cash, the program also reduces the likelihood of fraud and theft across government purchases — and makes it easier for our offices to ensure state funds are used appropriately and efficiently.
However, recently proposed legislation introduced by Senator Dick Durbin (D-Illinois) known as the Credit Card Competition Act, or CCCA, threatens the stability and security of credit card payments, as well as the benefits that West Virginians receive, directly and indirectly, from credit cards. The CCCA would take payment routing choice away from cardholders and would result in more transactions being processed by smaller, lesser- known networks — networks that are likely less secure and may have less regard for data privacy. It will also result in less revenue for credit card issuers, which means fewer rewards for West Virginian cardholders to offset the price of fuel, groceries, and travel. Importantly, it will reduce the rebates West Virginia receives through its Purchase Card Program — and, potentially, reductions in the state and local government services that are funded in part by these rebates, leaving our taxpayers picking up the tab, or doing with less.
While a lot has been said about this piece of legislation in search of a problem, it’s direct impact on state governments that utilize purchase cards, and taxpayers who will be ultimately picking up the tab, needs to be understood. Instead of helping hard-working West Virginians, the CCCA will do the opposite – all the while leaving our state transactions less secure. Congress shouldn’t waste any more time on it.
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