The State of Maryland recently announced that the state’s purchasing card program earned the state a $4 million rebate from Bank of America, the programs’ issuing bank. 78 state agencies participated in the program from April 26, 2012 through April 25, 2013 and charged more than $260 million to state purchasing cards.
“The state’s corporate purchasing program is an effective way for agencies to make small purchases. It provides for better accountability and allows vendors to receive their payments quickly,” said Peter Franchot, the state’s comptroller. “Most importantly, the rebate program allows us to protect the hard earned dollars of our state’s taxpayers.”
The state’s $4 million rebate payment, which is approximately equal to 1.5% of the program’s purchase volume, demonstrates just how lucrative commercial card programs can be. Funds earned from rebate agreements are especially valuable in the public sector, where budgets are notoriously tight.
One has to wonder though, how much more rebate revenue would the state have earned if the program was not limited to “small purchases?” Most states prohibit card transactions over a certain amount, often $2,500. However, corporations are safely using commercial cards to purchase millions of dollars worth of supplies in a single transaction. Perhaps it’s time for state governments to reconsider these restrictions.
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