There is a debate within my company regarding PCard usage. We can see the benefit of lower transaction cost associated with PCard vs using a purchase order but wonder if suppliers will increase their price to compensate them for the bank fees associated with this program.
Has anyone seen any evidence of suppliers raising prices to offset the PCard bank fee?
Yes we have done this in many cases with customers and also have been on the receiving end when we implemented pcards. Some of our customers we bill once a year for the cost of the bank card fees associated with their account. Other customers we bill an estimated cost monthly and reconcile once a year for reimbursement of fees. Many of our customers have implemented pcards just to stop using them again in a couple of years due to unexpected costs or unrealized savings. One item you need to know is these cards generally cost the vendor a lot more than normal cards. It was costing us as much as 5.5% for some cards. We worked with our card processor and have reduced the cost but we are now having to capture a lot more info. While these pcards look like they are a real benefit generally the real winner is the bank and the loser is the vendor and the company would is implementing the process. .
I have been on the supplier side and the answer is yes, at least mostly. It's a cost of doing business and if in a bid and you know the customer will be paying with a card, you build the cost in the margin. For vendors that have set prices, I'm sure that we are all paying for the fees to the degree of usage by their customers. In Virginia, it is against the law to charge back VISA or MC fees (except for government agencies). And with that said, I agree with Pete that the banks are the real winners in this arrangement. It is a crummy deal that the banks build in the % backs and incentives. Off of my soap box, my recommendation is for fixed pricing, use it. For bid pricing, ask what the impact is. Some vendors refuse to accept payment by card (usually larger ticket items). Hope this helps.
Thanks for the comments. I was a little skeptical that a supplier would adjust prices to their customers to reflect the additional fees because of the price file maintenance required to do this for each customer, but it appears that does indeed happen.
We use the P-Card extensively and have no issues with vendors adding on extra fees. There are a few that try, and we either pay them by check or change vendors.
When we implemented a pCard we used if for t&e. We didn't see any increase in fees by either the airlines, or hotels. The other big benefit from a pCard is the automation you can take advantage of from the electronic statements and payment processing. If you do this, check with the supplier and see how you can make this work. It could provide operating leverage and cut your processing costs.
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Ray, can you elaborate a little more about the automation option. We would love to be able to get the invoice detail electronically so that we can use no touch invoice vouchering for these invoices.
Thanks
Steve
The transaction info for the month was delivered electronically in an
There's a lot to this. You should be able to reach me by email through my profile and we can discuss in more length. RC
