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How P-Cards Work

The P-Card Process and Key Players

Purchasing Cards (P-Cards) or non-plastic account numbers are issued to employees (i.e., cardholders) responsible for making purchases or payments on behalf of their employer; for example, cardholders can order and pay for office supplies via a supplier’s website. Suppliers accept P-Cards for payment, utilizing the existing credit card infrastructure for payment processing. Transaction data is captured by a supplier’s point-of-sale (POS) system and transmitted through the card network. The level of transmitted data depends on the supplier’s process and technology systems; data levels include:
 

Date

Supplier

Transaction
Amount

Sales Tax

Customer-Defined
Code
Line-Item
Detail
Level 1 Standard

X

X

X

Level 2 Variable Data

X

X

X

X

X

Level 3 Detailed Data

X

X

X

X

X

X

*Members and complimentary subscribers, view more information about data levels. Not either one? Join today.
 
In addition to cardholders and suppliers, other parties are involved with the P-Card payment process:
 
Issuers work directly with end-users to implement and grow programs, issue cards and invoice posted P‑Card transactions. The issuer uses the services of the networks and processors to facilitate card issuance, authorize transactions and provide data. Many financial institutions are issuers. Issuers are sometimes referred to as card "providers."

 

Merchant acquirers enroll suppliers in the card acceptance process and implement equipment and software solutions related to this purpose. In addition, they facilitate payment flow, including payment to suppliers. A merchant acquirer is sometimes referred to as a supplier’s bank.

 

Networks facilitate the movement of transactional data between the issuer and merchant acquirer and set the rules pertaining to card acceptance by suppliers. Organizations in this role include Visa, MasterCard and American Express. (Note: American Express also assumes the roles of issuer and merchant acquirer.) Networks are sometimes referred to as "associations" (an outdated term) or the card brand.

 

Processors provide various services to card issuers and merchant acquirers, which may include card production, statement printing, authorization and data delivery.

 

The following figure depicts the P-Card process in a four-party payment system for which the network (Visa, Mastercard) links end-users, issuers, suppliers and merchant acquirers. (Technically, the network is a fifth party; nevertheless, this scenario is known as a four-party system.) As stated above, within the American Express model, which is representative of a three-party payment system, American Express fulfills the roles of card issuer and merchant acquirer, working directly with end-users and suppliers.

 

 

Download the complimentary NAPCP Annual Global Provider Directory—a Purchasing Card professional's guide to leading industry product and service providers.

 

 

The card issuer typically provides a single electronic invoice to the end-user organization—at a minimum of once per month—reflecting all cardholders and their respective P-Card transaction totals plus a grand total. An organization does not carry a balance, instead paying its card issuer in full (at a minimum of one payment per month) for all cardholders’ transactions. The organization processes the invoice, creating accounting entries and facilitating payment to the card issuer.

 

With P‑Cards, the end-user organization assumes liability for payment—the cardholder neither owes the card issuer nor makes payments. However, cardholders are expected to follow their organization’s policies and procedures related to P-Card use, including reviewing and approving transactions according to a set schedule (at least once per month). The organization can implement a variety of controls for each P-Card; for example, a single-purchase dollar limit, a monthly limit, merchant category code (MCC) restrictions and so on. In addition, a cardholder’s P-Card activity should be reviewed periodically by someone independent of the cardholder.

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News
Event Calendar

9/29/2020
Virtual Demonstration: Commercial Payments Exchange—The Next Generation Payables Solution

10/6/2020
Educational Webinar: Ensuring P-Card Compliance in the Age of Remote Work

10/14/2020
Virtual Demonstration: Amplify the Power of Your Commercial Cards with Tradeshift Go

10/21/2020
Virtual Roundtable: Lessons Learned From Implementing a Virtual Card Program

10/28/2020
Virtual Demonstration: Managing Spend Risk Now & Beyond: How to Protect Your Cash Flow

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Certified Purchasing Card Professional Credential 
The next application due date is May 10, 2021, to take
the exam during the June 2021 testing period.
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