The State of Nebraska has entered into a new, five-year contract for payment card processing services for credit cards and debit cards with U.S. Bank. The contract will become operational by Oct. 1, State Treasurer Don Stenberg said today.
The contract provides for two, one-year extensions. The state’s previous payment card processing provider, First National Bank and TSYS Merchant Solutions, has agreed to extend its contract while the new services are being implemented.
Treasurer Stenberg said that over the course of the contract with U.S. Bank, the state will save an estimated $550,000 in processing charges.
“The State of Nebraska expects to see greater volume under the new contract as Nebraskans continue to shift from using cash for these types of transactions to the use of credit and debit cards,” Stenberg said. In 2014 the state processed more than $154 million in credit and debit card transactions, up from the $153.9 million in 2013.
The state has been paying approximately 8 cents per card transaction in processing and authorization fees, Stenberg said. Under the new contract, the state will initially pay 4 cents per transaction plus 1 basis point, equal to one one-hundredth of 1 percent of the value of the transaction. Eventually that cost will drop to 2 cents and 1 basis point per transaction.
By law, all state agencies, including the University of Nebraska and state colleges, are required to process their credit card and debit card transactions under the state contract. Political subdivisions, such as cities, counties, school districts, and natural resource districts, may participate under the contract if they choose.
As part of the contract, U.S. Bank will provide 200 EMV (Europay, MasterCard, Visa) chip-enabled terminals to state agencies at no additional cost to the state
The new terminals, which will authenticate microchip-card transactions, will replace traditional magnetic stripe terminals now in use. With the chip-enabled terminals, the card embedded with a microcomputer chip is inserted in the terminal at the start of the transaction and stays in the terminal until the transaction is completed, generating a unique single-use code needed to validate the transaction and adding an additional layer of security.
The new equipment is compatible with changes in in-store counterfeit fraud liability, which will shift Oct. 1 in the United States to the party that has not adopted microchip technology—either the merchant or the financial institution issuing the credit or debit card. EMV chip technology, already in use in Canada, Europe, Latin America and the Asia/Pacific region, is designed to prevent counterfeiting, protect consumers, and reduce fraud.
“Enhanced security for Nebraska consumers of state services is a strong feature of the new contract, which will enable the state to provide secure, convenient credit and debit card processing services that protect Nebraskans and maintain the confidentiality of their personal information,” Stenberg said.
Among the charges that are expected to be paid by credit and debit card holders under this contract are admission and reservation fees to state parks, licensing fees to administrative and licensing boards, fines to the Liquor Control Commission, purchases in the Historical Society gift shops, and tuition to state colleges and the University of Nebraska. Non-custodial parents making child support payments to the Nebraska Child Support Payment Center, a division of the Treasurer’s Office, also will be using the new chip-card technology.
While the new contract will cover payments made to agencies and participating political subdivisions, it will not be used by agencies and political subdivisions to make purchases; those payments are covered under the state’s separate purchasing card contract with U.S. Bank and the state’s limited-liability travel card contract with UMB.
Stenberg thanked Bo Botelho, Materiel Administrator, and Michelle Thompson of the State Purchasing Bureau in the Department of Administrative Services; Deputy Treasurer Jason Walters; Char Scott, director of the Treasurer’s Treasury Management Division; and Heidi Wallace, deputy director of Treasury Management, for their work on the contract.
A copy of the contract can be found on the Department of Administrative Services website at http://das.nebraska.gov/materiel/purchasing/contracts/pdfs/66533_28o4_29awd.pdf .