Ref.

Ares(2023)6166359 - 12/09/2023

EUROPEAN COMMISSION
DIRECTORATE-GENERAL FOR COMMUNICATION

Resources
Finance & Control

Brussels
COMM.D.3.003/LB, MLJ

NOTE FOR THE ATTENTION OF THE INTER-INSTITUTIONAL PURCHASE CARD WORKING

GROUP

Subject: Market Research Outcomes

1. BACKGROUND TO THE MARKET RESEARCH

The proposal for a pilot project of purchase cards for DG Communication (DG
COMM), in partnership with the Joint Research Centre and the European External
Access Service, outlined the approach to market research under Section 4. (1)

DG COMM would conduct desk-based research, carry out an online survey, and
conduct structured interviews with market participants. The view was to help
understand the market structure and to best inform a procurement and implementation
strategy for purchase cards in the European Institutions.

The expected output from the research was the following:

1. Schematic of the market participants and options for potential suppliers

2. Understanding of what DG COMM/the European Commission, as a buyer, can
reasonably expect
3. Recommendations on the type of procurement procedure to follow
4. Recommendations on the type of contract that would best facilitate these services
5. Recommendations on how to future-proof a contract for these services

This Note provides an overview of the results of the market research in three distinct
parts (desk-based research, online survey, and interviews), and finalises with
recommendations and next steps.

(1) See Ares(2022)7424355 Technical discussion on purchase cards - commitments and accounting systems
- Follow up

Commission européenne/Europese Commissie, 1049 Bruxelles/Brussel, BELGIQUE/BELGIË – Tel. +32 22991111

Office: L-56 05/054 – Tel. direct line +32 229-99726

Laura.BROOMFIELD@ec.europa.eu
2. DESK-BASED RESEARCH

The desk-based research was conducted in order to determine likely suppliers and
organisations who may provide connections to suppliers, as well as to understand the
market. A key purpose was to identify the best possible communication channels for
the dissemination of an online survey, and to determine potential interview
participants.

The research was conducted by DG COMM with assistance and input from members
of the Working Group, including the JRC and the DG BUDG. A list of possible
contacts was drafted, and later categorised according to the type of organisation:

1. Public Sector Financial Institutions (2)

This included DG FISMA, DG ECFIN, and the European Central Bank (ECB),
and the European Banking Authority (EBA). The purpose was to request any
information on the banking sector that may be of use.

DG ECFIN and the EBA provided further contact details and useful links for
online databases of banks and financial institutions.

The EBA requested inclusion in the pilot project as a Contracting Authority.

2. Banking Sector Institutions (3)

This covered the European Banking Federation and its Member States
equivalent bodies.

Unfortunately, though contact was made with the EBF Communications team,
the contact ceased before the closing date of the survey. However, DG COMM
made contact directly with the Member States equivalent bodies, several of
whom agreed to disseminate an online survey.

3. Banks and Financial Services (4)

The last, but certainly not least, of the organisations identified for contact was
those market participants that could potentially provide the cards and
supporting services.

This included banks, financial services providers, and card providers with a
national, European, and/or global footprint. Contact was made with more than
20 companies via email, phone call, and completion of online request forms,
where available.

The desk-based research assisted with determining both what was available on the
market, as well as contacts for an online survey and interviews.

A search for similar tender documents from other contracting authorities resulted in
technical specifications for purchase cards for Irish and UK public services. Both

(2) See Ares(2023)2938149

(3) See Ares(2023)2947015
(4) See Ares(2023)2948913

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 specifications were based on a central purchasing function procuring on behalf of
multiple authorities.

3. ONLINE SURVEY OUTCOMES

3.1. Request for Information

The inter-institutional Working Group for the purchase card pilot project agreed on
the content of an online survey to gather input from the market on a range of specific
topics concerning the provision and use of cards.

The key objectives of the market sounding exercise were as follows:

• To establish the nature, structure and capacity of the market to deliver the
provision of Purchasing Cards to European institutions.

• To establish the feasibility of using a Framework or any other contract format for
the provision of Services and Support to the contracting authorities.

• To identify any obstacles or risk factors associated with the delivery of Purchasing
Card Services.

• To establish the viewpoint of market operators on potential services to be covered

under a Framework/Contract.

• To provide the market operators the opportunity to contribute to the overall

strategy and approach to any potential Framework or contract type for the
provision of Purchasing Cards for European institution contracting authorities.

The survey was classed as a Request for Information (RFI), (5) and was structured in
five distinct parts:

1. Contact and Company Details – this included an option for future contact, and
space for email and telephone details

2. Company Profile – this section had the purpose of determining what type of
company was responding (SME, etc.), whether the provision of purchase cards
were the sole purpose of the company, and their geographical reach, among
other questions

3. Market Structure and Drivers – the purpose of this section was to understand
how the companies themselves see the market

4. Service Provision – this section covered questions focused on the types and
levels of service the respondents can provide

5. Procurement Procedure – the last section asked questions that would assist in
determining a path forward in terms of procurement, including questions on

(5) See Ares(2023)2909627 for the RFI, the Prior Information Notice, and related corrigenda

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 staffing levels and their approach to sustainability; there was also an option to
upload any supporting documents.

The RFI was published using the online survey tool EU Survey, with a notification of
the publication included in the Official Journal of the European Union (see footnote
5).

The survey was communicated via the channels identified through the desk-based
research. It remained open from the 8th March 2023 until the 18th April 2023, with
the original deadline for closing extended due to Easter holidays in early April.

At the closing of the survey, five responses were recorded, with all five providing
card and banking services as their core business.

3.2. Results of the Request for Information

The results of each of the sections are detailed below.

Contact and Company Details

There were five responses received, (6) listed alphabetically:

• Airplus International (Germany/Belgium, regulated by the German Federal

Financial Supervisory Authority)

• Banco Credibom (Portugal, regulated by the Bank of Portugal)

• Bank Millenium (Poland, regulated by the National Bank of Poland)

• Citibank Europe (Ireland/UK, regulated by the Irish Central Bank)

• Millenium Goodie (Poland, regulated by Komisja Nadzoru Finansowego)

The responses from Bank Millenium and Millenium Goodie appear to be from the
same company (same address) but are from different people with different roles within
the organisation. As the opinions of the respondents differ for questions in the survey,
these are taken as two separate responses. However, it is accepted that there were four
unique organisations represented by the five respondents.

All five respondents were willing to be contacted with further questions by DG

COMM or the purchase card working group, with phone numbers and email addresses
provided.

(6) See Ares(2023)2938298 for all five responses

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 Company Profile

Only one of the organisations declared themselves as a Small or Medium

Enterprise, (7) with all stating their core business as banking, the provision of customer
credit, or an ecommerce platform.

Of those who provided a numerical response to the question on what percentage of

their core business centred on purchase cards, two respondents were 20% or below,
and one was 100%.

Three of the five respondents have provided purchase cards to the public sector, and
only one provides cards worldwide. The remaining can provide the cards to either the
country of issue of the card (with the possibility of extending to EU27), or to limited
countries.

The turnover (for those that provided the figures) for the provision of purchase cards
is:

2020 2021 2022

Highest € 4.8 billion EUR 9.2 billion EUR 12.1 billion EUR

Lowest € 3.5 million PLN 6.5 million PLN 10 million PLN

Table 1: Highest and Lowest Turnover Stated

The types and levels of insurance liability cover for the cards was provided by only
one company, which covered corporate liability waiver insurance designed to protect
against employee misuse or fraud. Further details from the other respondents were
limited to a confirmation of PCI DSS (8) certification, compliance with all
requirements associated with the delivery of purchase cards and/or Strong Customer
Authentication (SCA).

Market Structure and Drivers

When asked to describe the market structure, the responses did not show a level of
coherency or agreement, as can be seen by the distribution of the answers below:

(7) https://single-market-economy.ec.europa.eu/smes/sme-definition_en
(8) Payment Card Industry Data Security Standard, managed by the Payment Card Industry Security
Standards Council https://www.pcisecuritystandards.org/

5
 Figure 1: Market Structure, by Respondents

The broad spread of the answers could indicate that a statistically relevant analysis of
this information on its own would not be possible. The follow-up question in the
survey asked companies to identify who they see as their main competitors. Here, the
responses included other large banks, card providers, fin-techs and other online/small
companies underwritten by large banks. This market fragmentation may explain the
broad outcome of the previous question.

The evolution in the market was reasonably coherent across the responses, with the
further development of digital banking, virtual cards, and virtual or contactless
payments systems seen as the direction of evolution in the sector.

Similarly, when asked about the main cost drivers for purchase cards, the answers
included the cost of the cards themselves, processing and staffing costs, and the cost
impact of the customisation of a solution.

The actors within the supply chain of purchase cards included the following
amalgamated response:

 Plastic supplier and printer

 Card provider (e.g. Visa, Mastercard, AmEx)

 Card issuer

o Banking/Financial service

o Customer service

 Customer

o Organisation level

o Card user

 Acquiring bank

 Merchant

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 The above indicates at least six parent level key actors in the value chain for physical
purchase cards.

In terms of industry norms, there were no revenue sharing norms identified by any of
the respondents, but all bar one stated that some level of revenue sharing was possible
or expected and that the model would depend on factors like overall estimated
transaction volume, desired payment terms, number of cards, or merchant categories.
Respondents were then provided with a list of possible industry norms regarding
services provide with purchase cards. The list and responses are below:

Figure 2: Options for Service Delivery

The majority of companies offer multi-factor authentication and anti-fraud measures

for the cards they provide. This is reflective of a highly regulated banking sector (e.g.
PSD2 (9)), and is addressed in the question on challenges in the sector concerning
fraud and data protection. The majority referred to their own programmes and anti-
fraud measures for managing these challenges. All respondents use at least a two-step
authentication factor, which may change depending on the use (i.e. “in person” or
“online”).

Other key points to note are that almost all offer virtual cards and the ability to restrict
payment to particular retailer categories. However, only one respondent provides the
ability to reject payments prior to the issue of the monthly invoice.

Service Provision

This section of the survey built on the previous questions, and sought to understand
further what type of services are on offer.

In terms of types of services offered under a possible future Framework Contract, the
respondents replied as follows:

(9) Revised Payment Services Directive (PSD2) https://www.ecb.europa.eu/paym/intro/mip-

online/2018/html/1803_revisedpsd.en.html

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 Figure 3: Card Services Available

The respondents offering the ability to limit the use of a card specified that possible
controls could be tied to Merchant Category Codes (MCC), cash access, transaction
amount, transaction volumes, and currency, as well as other elements.

One respondent did not have the ability to provide purchase cards with the
characteristics specified in the introduction to the survey and had no other similar type
of payment instrument. Out of the other four, two offered both virtual cards and
physical cards, and one of them also offered other types of cards – this solution entitled
“Proprietary Rate Solution” was presented as a recent development aimed at making
payments to suppliers, who cannot or will not accept a standard card transaction due
to the costs associated with the processing (the merchant acquiring fee). The remaining
two offered either virtual cards or physical cards. All virtual cards offered can be used
for “in-shop/physical” purposes.

Physical cards offered would be delivered to the contracting authority by post.

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Virtual cards offered would all be delivered to the contracting authority electronically
either as encrypted e-mails or via a portal. One respondent would also offer the virtual
cards in a mobile wallet (e-wallet) late 2023/early 2024.

The main differences between, and advantages of, physical and virtual cards identified
by the respondents are as follows:

- Physical cards are plastic cards, whereas virtual cards are as indicated virtual

- Virtual cards can be single or multiple use cards

- Virtual cards offer a greater degree of control prior to a transaction

- Virtual and physical cards may be used to pay any supplier who accepts the card
type (e.g. Mastercard, VISA, American Express, Diners, etc.)

- Payments are settled at an agreed milestone depending on the payment terms

- Both types of cards allow central management, monitoring and reporting

possibilities

- A purchase card programme allows for streamlining of payment of suppliers.

One respondent stated that there would be no limit to the number of cards issued per
contracting authority – a possible limit would rather apply to the credit facility to be
made available.

In terms of fees and costs associated with the purchase card programmes offered, the
respondents cumulatively identified the following:

- Standard interchange fee, which is normally paid by the merchant (Merchant

Acquiring fee)

- Cross-border transaction fee

- Foreign exchange fee

Other respondents simply stated that it would depend on the scope and services
required or that it would be provided at a later stage. Two respondents specified that
one physical card with an expenditure limit of 5000 EUR per month would either be
offered free of charge or involve a charge of 50 EUR respectively.

Three respondents declared to be able to provide transaction data in known file

formats, such as excel, XML, VCF (VISA), CDF (Mastercard) and ATX. Reports can
either be made available as files sent via e-mail or to be generated via web-portals.
One did not respond to the question and one said the information would be provided
at a later stage.

Among other services provided as part of the purchase card programmes, the
respondents identified in sum loyalty and cash back/rebates programmes, customer
services centre as well as a Proprietary Rate Solution (card payment of suppliers
through a payment facilitator for those merchants not willing or able to accept card
payments).

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Procurement Procedure

The final section of the survey covered questions concerning the procurement of
purchase card services. Here, questions were asked that were designed to inform
decisions concerning possible baseline staffing levels, sustainability issues, and a
general “anything else” question. There was also an option to upload documents
provided in this section.

The first two questions concerned whether the companies could foresee any
limitations to responding to a request for tenders, and what kind of staffing level they
would need in order to manage a contract or framework as described in the
introduction to the survey. For the former, one company identified an issue regarding
whether they would have the credit appetite to support the purchase cards, and who
the institutions would bank with. For the latter, those that responded noted a need to
have a dedicated team.

The next three questions covered the issue of sustainability – both in terms of reducing
impact on the environment, and being socially responsible. When provided with an
option of one of five statements concerning their company’s response to sustainability,
none of the respondents stated that they were complying only with the basic legal
requirements:

Sustainability Statement No. of Responses

We do nothing except comply with basic legal requirements. We 0

comply with all legislative requirements

We do what pays, by adopting eco-efficiency measures that cut costs 1

or boost the brand. Cutting greenhouse gas emissions and reducing
industrial water use are classic efficiency measures that tend to boost
company profits in the process, especially in the early stages

We do our fair share in making the switch to sustainability and 1

cutting our emissions. We adopt science based targets and measure
against them

We do mission zero and eliminate all negative impacts from our 1

operations and supply chain. Our approach is to do no harm, an
ambition that is also known as "mission zero". Our aim is net zero
impact not just in energy or water but in all resource-related aspects
of the organisations operation

We do everything that we can. This is an organisation that is giving 2

back to the living systems and recognizes that they have a
responsibility to leave the living world in a better state than they
found it. This is a generous business leaving a positive environmental
and social legacy.

Table 2: Company Responses to Sustainability Statements

In terms of what socially responsible objectives their company could reasonably

foresee implementing in the course of any contract or framework for the provision of

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services, respondents were provided with multiple choices. The results for the question
are:

Figure 4: Options for Social Objectives in Service Delivery

On the question of whether the inclusion of sustainability benefits would result in an

additional cost, two respondents said no, two provided details of their sustainability
programmes, and one did not respond to the question.

Survey Conclusions

Based on the survey responses, the following conclusions may be drawn:

- The respondents do not include all actors involved in a purchase card circuit.
Nevertheless, the respondents include the likely tenderers to a potential
procurement procedure, who have knowledge on the products offered on the
purchase card market.

- The main cost drivers for purchase cards include the cost of the cards themselves,
processing and staffing costs, and the cost impact of the customisation of a
solution.

- A purchase card programme could allow for central management, monitoring and
reporting.

- Various controls can be set up for purchase cards – but primarily for virtual card
solutions.

- All cards can be used for in shop/physical purchases.

- Purchase card solution coverage depends on the merchants' acceptance of any

given solution. A purchase card programme may therefore not be able to cover all
below 1000 EUR purchases.

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 - For the covered purchases, a purchase card programme would help streamline
payments.

- The main fee associated with the purchase cards regardless of type is interchange
fees, which is paid by the merchants.

- Virtual cards and digital solutions (e.g. e-wallet) will prevail in future.

- Operators do more than basic requirements in terms of reducing impact on

environment and social responsibility, and are open to doing more.

4. INTERVIEW OUTCOMES

The need for interviews with market participants was identified in the proposal for the pilot
project for purchase cards. These were carried out in three distinct forms:

1. Follow-up interview from the RFI respondents

This was to seek clarity and development of RFI responses. All five respondents to
the RFI agreed to a follow-up interview. The minutes can be found by reference in
the table in Annex A.

2. Interviews with banks already providing payment services to the Commission

There are currently four banks providing banking/payment services to the

Commission through a contract with DG BUDG – ING, BNP Paribas, Citibank,
and UniCredit. Citibank was invited to an interview on the basis of their RFI
response. The remaining three all agreed to an interview. The minutes can be found
by reference in the table in Annex A.

3. Interviews with card providers

There are three main market providers for card payments (physical and virtual) –
Mastercard, VISA, and American Express. Card providers do not provide their
services directly to customers, but instead operate through a third party such as a
bank or financial institution. Mastercard agreed to an interview to find out more of
the services that usually come with their cards, with minutes found by reference in
the table in Annex A. American Express (Europe) and VISA were approached on
multiple occasions, but either declined or ignored the invitations. (10)

In the first and second form of interviews the discussion followed two paths – operation of
the card service, and contract management. For the card provider, as they would not be a
contract participant, questions were focused on the day-to-day use and management of
cards. The following sections provide amalgamated and anonymised responses to both,
from all participants.

(10) Please see Ares(2023)4061801 for a copy of contacts and attempted contacts with Mastercard, VISA
and American Express

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4.1. Operation of the Card Service

As mentioned in point 3 of this Section 4 above, there are a number of card providers,
though the most common providers are Mastercard and VISA. This was confirmed
through all the interviews, with AmEx noted for its high transaction costs. The
categories of cards offered by providers usually fell under one of three general
headings:

1. Corporate cards (credit cards, pay-as-you-go, gift cards, etc.)

2. Purchase cards (also known as procurement cards, differs from corporate

cards by having the capacity to limit spend and transactions)

3. Sector-specific cards (such as travel cards)

The categories of cards are currently available in two types – physical and virtual.

Physical Cards Virtual Cards

• Mastercard and VISA provide these
• Plastic
• Can be a pre-paid card
• Often requires a bank account, but
this can be country dependent
• Can be in a person's name or
organisation or Unit name,
depending on supplier
• Two step authentication for use
• Can be used for online and in-person
purchases
• Mastercard currently provide these,
VISA to roll-out soon
• Can be single-use or multi-use
• Can be pre-paid
• Bank account not required for all
• Can be in person's name or
organisation or Unit name,
depending on supplier
• Not yet two step authentication for
all types
• Used for online purchases mostly
• Evolution in coming years -
migration to eWallets to enable in-
person purchases via Smartphone

For purchase cards, regardless of the type, limits can be placed on the usage of the
cards, such as setting a maximum amount of expenditure, or limiting by merchant
category code; confirming the information found during the survey.

The evolution of the market towards virtual cards and their migration to eWallets is
an interesting point to note in order to future-proof any services contract, even if the
contract begins as a short-term pilot with the potential for extension.

4.2. Contract Management

The discussion on contract management covered a number of elements. Foremost was

how such a contract could work with a Lead Contracting Authority who may not
have or need access to banking services of the other Contracting Authorities or
devolved organisations (i.e. a Lead DG, with other DG’s using and managing the

13
 service themselves). This did not pose an issue for the interviewees, who concurrently
said a structure can be developed to fit the needs of the contract.

The level of background data on transactions was dependent on the reporting

facilities of the interviewees. The interview and demonstration with Mastercard
showed the full functionality of their card reporting system, and confirmed that banks
would have flexibility. However, some of the interviewees proposing Mastercard
products offered less functionality. Other information gathered on the background
data and use of the cards echoed that of the survey outcomes.

On costs for providing a card payment scheme, there were two different approaches
across the board of the interviewees. Some offered a zero cost, citing the profits
possible on transaction fees (including foreign exchange fees). Others charged costs
based on management fees and/or card fees. Card fees could be in the region of €20
per card issued, per annum.

Several interviewees (and survey respondents) mentioned the possibility of revenue

sharing on the income generated from the transaction fees. This would entail a
repayment back to the Contracting Authority of a set percentage of income generated.

Interview Conclusions

- The interviews held provided further supporting and supplemental information to

the survey, with an expansion on interviews outside of survey respondents
yielding very useful supplemental details

- The category of card most suitable to fit the needs of detailed reporting on
transactions would be a purchasing card

- There are a large number of variables in terms of what can be provided (i.e. name
on the card, requiring a bank account, access to data reporting, etc.)

- Card payments are evolving towards greater use of virtual cards

- The approach to costs, fees and revenue sharing is not uniform, but it is clear that
the main source of income of the card issuers would be generated by the
transaction fees from card usage.

5. CONCLUSIONS AND RECOMMENDATIONS

The purpose of the market research was multi-fold, as set out in Section 1 of this report.
The information gathered from the market research supports the following conclusions and
recommendations for the procurement card project.

1. Schematic of the market participants and options for potential suppliers

There are a number of types of market participants, ranging from banks and credit
institutions to card providers. Card providers themselves (Mastercard, VISA, etc.)
do not deal directly with customers, but instead provide services via an
intermediary such as a bank or specialist card company.
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 Card Providers (Mastercard,
VISA, AmEx, etc.)
Other
Specialist Card
Banks Financial
Companies
Institutions

Customer Customer Customer

Card user Card user Card user

It is recommended that the pilot project only limits the type of contractor (i.e. bank
or specialist card company) that it will work with depending on the option chosen
under Recommendation 3 below.

2. Understanding of what DG COMM/the European Commission, as a buyer,

can reasonably expect
The market is quite diverse in terms of the levels of service on offer. It is highly
dependent on the stage of progress a bank or card company is, and their internal
corporate strategy for products to offer customers.

However, it has been possible to amalgamate the information in to a first draft of

technical specifications and clauses that may be useful for a future competition.
This can be found at Annex B.

3. Recommendations on the type of procurement procedure to follow

Given the diversity in what is available by banks and card companies, and that
this can be flexible depending on the strategy of these organisations, it is
recommended that an open or restricted competition would not be suitable for the
procurement of these services.

A competitive dialogue procedure may be the best method for obtaining a solution
that will work for an inter-institutional pilot scheme such as this. The competitive
dialogue procedure requires a minimum specification but allows for the
Contracting Authority to work with Tenderers through successive stages, to build
contract proposals together prior to the final evaluation. This procedure is
provided for under 12.1(c) of Annex I of the Financial Regulation.

An alternative to a stand-alone competitive dialogue would be to fold in the needs

of a card payment service to the planned DG BUDG banking services tender. At
least two interviewees confirmed that a card payment service would be regarded
as a natural part of a banking services contract.

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 While the procedure was initially designed as a pilot for DG COMM, it is clear
from the working group and the research that there are other institutions interested
in having access to a similar payment solution. It is therefore recommended that
any procurement procedure carried out is done so on an inter-institutional basis.

4. Recommendations on the type of contract that would best facilitate these

services
If the European Commission proceeds with a stand-alone procedure, then it is
proposed that the contract awarded will be a Concession Agreement.

A Concession is defined in Article 2(14) of the Financial Regulation:

“‘concession contract’ means a contract for pecuniary interest concluded in
writing between one or more economic operators and one or more contracting
authorities within the meaning of Articles 174 and 178, in order to
entrust the execution of works or the provision and management of services
to an economic operator (the ‘concession’), and where:

(a) the remuneration consists either solely in the right to exploit the works
or services or in that right together with payment;

(b) the award of the concession contract involves the transfer to the
concessionaire of an operating risk in exploiting those works or services
encompassing demand risk or supply risk, or both. The concessionaire shall
be deemed to assume an operating risk where, under normal operating
conditions, there is no guarantee of recouping the investments made or
the costs incurred in operating the works or the services concerned;”

As the possibility to generate an income is dependent on the uptake and usage of

the cards, it is considered that this contract falls within both (a) and (b) above.

A concession contract could be in place for an extended period beyond four years,
in order to ensure a return on investment by the supplier. Based on other
contracting authorities procuring these services, it is recommended that a
minimum of seven years is considered for this contract.

If the alternative path of including the provision for cards within the DG BUDG
banking services competition, Tenderers should be requested to provide these
services at no cost, with the possibility of any revenue generated for the Tenderer
by the card usage to result in either savings against the overall contract, or to fund
sustainability measures. This approach is recommended due to the European
Commission’s inability to receive funds via external channels.

5. Recommendations for sustainability

All survey respondents noted an openness in doing more than the basic for
reducing negative impacts on the environment and society. The European
Commission, as guardians of the Treaties, and supporters of the European Green
Deal, should take the opportunity to ensure sustainability measures are put in
place for any contract arising out of this pilot.

Sustainability measures can be either to meet social or environmental objectives.

For social objectives, the majority of survey respondents were open to
establishing paid work experience and apprenticeships opportunities in their
16
 company. It is recommended that any revenue-sharing proposals could be used
to fund contractual obligations on meeting social objectives.

For environmental objectives, it is recommended to migrate towards using virtual

cards where possible. Where not possible, to request the Tenderers to seek
alternative materials to non-biodegradable plastic for the physical cards.

6. Recommendations on how to future-proof a contract for these services

Survey respondents and interviewees identified the shift towards virtual payment
cards. It is recommended that any contract arising from this pilot has both the
option for physical and virtual cards, along with the ability to evolve the payment
card solution to incorporate the use of eWallets and Smartphone payments with
virtual cards for in-person transactions.

6. NEXT STEPS

The next steps in this process support that of the pilot proposal. It is recommended that an
internal scoping, focusing on the financial accounting systems, both in terms of software
and the practice of payments and reconciliations, is carried out. All institutions interested
in being part of this process should be invited to carry out a similar scoping exercise, as
part of the Memorandum of Understanding.

This scoping will further define the draft technical specifications and criteria for any
further competition, ensuring tailoring to the needs of the Contracting Authority.

Laura BROOMFIELD (lead) & Mette Lind

JENSEN

c.c.: SCHWARZHAUPT Ilja (JRC-KARLSRUHE); HOMME Nico (EEAS);

VAN DE MEERSSCHE Cedric (EEAS); FILLEE Romualdo (BUDG);
OPREA Camelia (BUDG); NEGUT Cosmin-Catalin (BUDG);
PETANOVA Lenka (BUDG); ROTH Lukas (COMM); LASCU
Alexandru (COMM); VLACHOPOULOS Stergios (COMM);
BURATTINI Sabrina (COMM); KEMESIS Marijus (COMM); COMM
D3 PROCUREMENT GRANTS; SIMOU Patty (PMO)

17
Annex A Interview times and dates

Date and Place Company Invited Participants Ares reference – minutes of

time meetings

4 May Teams Mastercard Henri Dewaerheijd, Mastercard Ares(2023)4178573

2023, meeting Jan Heylen, Mastercard
11:30- Amandine Servotte, Mastercard
12:30 David Eardley, JRC
Davide Giandomenico, JRC
Ilja Schwarzhaupt, JRC
Nico Homme, EEAS
Cedric van de Meerssche, EEAS
Romualdo Fillee, DG BUDG
Laura Broomfield, DG COMM
Isabel Greco, DG COMM
Mette Lind Jensen, DG COMM
10 May Teams Mastercard Jan Heylen, Mastercard See Section 4 of above.
2023, meeting (Presentation of Arpad Toldi, Mastercard
11:00- analytical tool) David Eardley, JRC
12:00 Romualdo Fillee, DG BUDG
Nico Homme, EEAS
Cedric van de Meerssche, EEAS
Johan de Almeida da Cunha, DG
BUDG
Laura Broomfield, DG COMM
Lukas Roth, DG COMM
Mette Lind Jensen, DG COMM
11 May Teams Airplus Eric Longin, Airplus Ares(2023)4048979
2023, meeting Peter Lybeer, Airplus
11:00- David Eardley, JRC
12:00 Ilja Schwarzhaupt, JRC
Nico Homme, EEAS
Cedric van de Meerssche, EEAS
Romualdo Fillee, DG BUDG
Laura Broomfield, DG COMM
Lukas Roth, DG COMM
Mette Lind Jensen, DG COMM
15 May Teams BNP Paribas Laetitia Abioba Ndembi Nana, Ares(2023)4178590
2023, meeting Fortis BNP
15:00- Henri-Axel Robeyns, BNP
16:00 Bea Beterams, BNP
David Eardley, JRC
Ilja Schwarzhaupt, JRC
Cedric van de Meerssche, EEAS
Nico Homme, EEAS
Romualdo Fillee, DG BUDG
Laura Broomfield, DG COMM
Lukas Roth, DG COMM
Mette Lind Jensen, DG COMM
16 May Teams Citibank Victoria Elmes, Citibank Ares(2023)4048961
2023, meeting Daniel Lapena Gomez, Citibank
10:00- David Eardley, JRC
11:00 Ilja Schwarzhaupt, JRC
Nico Homme, EEAS
Cedric van de Meerssche, EEAS
Romualdo Fillee, DG BUDG
Laura Broomfield, DG COMM
Lukas Roth, DG COMM
Mette Lind Jensen, DG COMM

18
16 May Teams Bankmillenium Boleslaw Witkowski, Ares(2023)4049001
2023, meeting Bankmillenium
14:30- Szymon Kuchciak, Bankmillenium
15:30 Sylwia Bilinska-Jaroszczak,
Bankmillenium
David Eardley, JRC
Ilja Schwarzhaupt, JRC
Nico Homme, EEAS
Cedric van de Meerssche, EEAS
Romualdo Fillee, DG BUDG
Laura Broomfield, DG COMM
Lukas Roth, DG COMM
Mette Lind Jensen, DG COMM
23 May Teams ING Matthias Wahnschaffe, ING Ares(2023)4178606
2023, meeting David Eardley, JRC
11:00- Ilja Schwarzhaupt, JRC
12:00 Cedric van de Meerssche, EEAS
Nico Homme, EEAS
Romualdo Fillee, DG BUDG
Laura Broomfield, DG COMM
Lukas Roth, DG COMM
Mette Lind Jensen, DG COMM
2 June Webex Credibom Pedro Mata, Credibom Ares(2023)4048914
2023, meeting Filipa Santos, Credibom
11:00- Emanuel Figueredo, Credibom
12:00 Ilja Schwarzhaupt, JRC
David Eardley, JRC
Cedric van de Meerssche, EEAS
Nico Homme, EEAS
Laura Broomfield, DG COMM
Lukas Roth, DG COMM
Mette Lind Jensen, DG COMM
14 June Webex UniCredit Michael Gräf (Unicredit) Ares(2023)4178555
2023, meeting Ulrich Stricker (Unicredit)
11:00- Marc Weingart (Unicredit)
12:00 Ilja Schwarzhaupt, JRC
David Eardley, JRC
Cedric van de Meerssche, EEAS
Nico Homme, EEAS
Romualdo Fillee, DG BUDG
Laura Broomfield, DG COMM
Lukas Roth, DG COMM
Mette Lind Jensen, DG COMM
4 July Teams ING – demo of Matthias Wahnschaffe, ING No demo recording available
2023, meeting tool (replacement David Eardley, JRC due to commercial sensitivity.
15:30- of demo that was Ilja Schwarzhaupt, JRC See Ares(2023)4178606 for
16:30 to take place on 6 Cedric van de Meerssche, EEAS background notes on the
June 2023, 15:00- Nico Homme, EEAS system shown.
16:00) Romualdo Fillee, DG BUDG
Laura Broomfield, DG COMM
Lukas Roth, DG COMM
Mette Lind Jensen, DG COMM

19
Annex B First Draft Technical Specifications and
Criteria

An early draft skeleton specification for the provision of cards and card services, and
suggested selection and award criteria are possible following the market research. This
should be built upon and fleshed out via the internal scoping phase prior to the launch of
any competition.

The recommended Draft Technical Specifications for Purchase Cards for the European
Union Institutions is set out in the following headings:

• Provision of Cards and Card Services

• Suggested Selection Criteria
• Suggested Award Criteria

Draft Summary of Services

Purchasing Cards, in the context of public sector requirements, are charge cards which
function in a similar manner to credit cards and are used to purchase goods and services
(e.g. face to face, telephone and online transactions). They differ from credit cards in the
sense that balances are normally settled in full on a designated monthly settlement date.
Purchasing Cards can be used with any card-enabled supplier or they can have controls
placed upon them by the Contracting Authority (and nominated Administrators) or by the
Card Issuing bank (upon request by the Contracting Authority), limiting them to use within
designated categories of spend. Purchasing Cards allow approved individual Cardholders
to conduct transactions in all major currencies.

The Card Issuing bank issues, on a monthly basis, a single electronic invoice/statement, to
the Purchasing Cards covering all accounts (one master statement and card statements for
individual users) via an interface from the Purchase Card on-line system. The data can be
supplemented and coded by Cardholders/Administrators in order for it to be automatically
uploaded and fed into the appropriate cost centres within the Contracting Authority’s
financial accounting system.

Purchasing Cards are funded through a merchant service charge which is based on a
percentage of each transaction. The fee is apportioned between the Card Issuing bank, the
merchant service provider and the payment network (e.g. Visa / Mastercard). The
merchant services provider pays suppliers, usually within 2-4 working days.

For the Contracting Authority, Purchasing Cards will typically used to procure low-value
goods and services below €1,000, though this limit may increase in time with the needs of
the Authority.

Typical examples of lower-value purchases in the public sector can include the purchase
of stationery, office supplies, office equipment, computer supplies, building and
maintenance supplies, books and periodicals. The type of suppliers from which these
goods and services are purchased range from large multi-national companies to micro,
small and medium enterprises.

20
For the purpose of this RFT, the Purchasing Card Programme solution being sought by the
Contracting Authority should be provided free of all charges other than, Government
imposed fees and duties (if any, and if relevant to the Contracting Authority).

Under no circumstances, shall interest be chargeable to the Framework Client, other than
where account transactions, that are undisputed, are not paid in full by the agreed monthly
settlement date.

1. Provision of Cards and Card Services

The Contractor(s) must provide the option of both physical cards and virtual cards to the
Contracting Authority.

The Contractor(s) must provide the following services in support of the provision of cards:

• Multi-factor authentication for payments

• Ability to restrict the spend limit per card
• Ability to restrict the card use to certain merchant categories
• Web Portal for accessing real-time expenditure data, with monthly reports available
in a number of formats
• Anti-fraud measures to ensure safe and compliant usage of the cards

Physical Cards

The Contractor(s) must provide the option to include on the cards a design or logo of the
Contracting Authority. The Service Provider shall be responsible for the embossing and
printing of Purchasing Cards, at its own expense. The minimum specification for the
design of the cards include:

• The Service Provider shall design all Purchasing Cards, which are designated as
"Public Sector Purchasing Cards" and all designs shall be subject to the prior
approval of the Contracting Authority.
• The Purchasing Card design should take account of the communications guidelines
of the Contracting Authority
• The Purchasing Card will include wording that the Contracting Authority may
reasonably require.
• The Purchasing Card will include a warning regarding misuse.
• The Purchasing Card design will include the Card Issuer’s telephone helpline
number, website and email address.
• All Purchasing Cards will include, but are not limited to, the following features
within card scheme rules:
▪ Security features
▪ Hologram
▪ Card scheme line micro border or equivalent
▪ Unique card number
▪ Card verification value
▪ Signature panel
▪ Chip and PIN functionality

21
 ▪ Additional security features as mandated by Card Programmes, as
new security innovations are introduced (any new security
feature(s) can only be introduced following the approval of the
Contracting Authority).

Virtual Cards

The Contractor(s) will provide virtual cards that can be multi-use or single-use, depending
on the needs of the Contracting Authorities wishing to use the Service.

Multi-use virtual cards will have similar functionality and security design features, where
possible, as physical cards.

Single-use virtual cards will require authentication and approval by the Contracting
Authority’s authorised personnel prior to the issuance of each card. Each Contracting
Authority should be able to issue cards or delegate the ability to issue cards for their own
use.

Implementation of the Cards

The Contractor(s) will be required to implement a timely and efficient application process
for Contracting Authorities wishing the use the Service.

The Contractor(s) will be required to work individually with each of the existing and future
Contracting Authorities (Lead and Secondary) to develop an Implementation Plan. The
exact scope may vary depending on the Contracting Authority’s requirements. Spend
credit limits and per card spend credit limits are to be set as directed by individual
Contracting Authority.

The Contract(s) will be expected to implement a promotional campaign designed to

increase the roll-out of the Service.

Card Helpdesk

The Contractor(s) will be required to provide a fully-managed help-desk to support the day
to day management of programmes for the Contracting Authority and is expected to
include the following:

• Address queries from Cardholders and the Contracting Authority concerning the
operation of the accounts maintained by the Contractor(s).
• At the request of an authorised official of the Contracting Authority, reset
purchasing and usage limits and any other controls deemed appropriate (Section 5
(5.1.1 refers)).
• Provide guidance and support for purchasing Cardholders during the hours required
by the Contracting Authority.
• Provide technical support for the on-line system.
• A description of the escalation procedures for solving problems that are not
resolved in the first instance.

22
In order to effectively manage the contract, the Service Provider is expected to meet the
following response times:

• Telephone Calls - 100% of calls to the helpdesk shall be answered within an

average of 25 seconds.
• Lost call rate - lost or abandoned calls shall be no more than 4.5% of total calls
made.
• Account Queries - Queries that cannot be resolved immediately must be resolved
within 48 hours.
• Email Queries - 100% of queries received by email must be answered within 24
hours of receipt.
• Spend Limits - Adjustments / variations to spend limits must be actioned within 24
hours.

Tenderers should set out, in their tender response, their proposed approach for providing
a fully-managed help-desk to support the day to day management of programmes for
Contracting Authorities taking into account the requirements above.

Contract and Account Management

The Contractor(s) will be required to provide appropriate account management for each
Contracting Authority. The Contractor(s) is expected to provide a dedicated account
manager and/or nominated key point of contact to the lead Contracting Authority
[INSERT HERE].

The Contractor(s) will be required to manage the Purchasing Card programme for
Contracting Authorities, by way of an account management activity which is expected to
address the following;

• Explain the features and benefits of the Purchasing Card to the Contracting
Authority
• Introduce the commercial basis on which the Purchasing Card programme will
operate.
• Facilitate the introduction of the Purchasing Card programme
• Be the on-going point of contact for all commercial, implementation and service
management issues.
• Review the Purchasing Card programme with the Contracting Authorities to
measure progress against objectives.
• Introduce Purchasing Card programme enhancements and developments and
discuss their benefits with the Contracting Authorities.
• Support the promotion of the Purchasing Card programme to other divisions,
sites or business areas of the Contracting Authorities.
• Agree and manage a detailed implementation schedule for the Purchasing Card
programme.
• Ensure the Purchasing Card programme features are in accordance with the
Contracting Authorities’ requirements.
• Support and assist in the training of Purchasing Cardholders and other relevant
employees of the Contracting Authorities.

23
 • Provide recommendations and solutions to issues or concerns.
Act as a dedicated point of contact for Contracting Authorities in relation to
fraudulent transactions.
• Act as the focal point for all implementation activities.
• Assist and guide the Contracting Authorities' own Purchasing Card programme
administrator with interpretations and analysis of the Purchasing Card programme
activity and manage pilot Purchasing Card programme strategies.
• Develop additional uses for the Purchasing Card with the Contracting
Authorities card programme administrator.
• Ensure that the Contracting Authorities is fully supported with the appropriate,
trained resources.
• Assist in the development of Services for Contracting Authorities through the
delivery of presentations, checklists, sample procedures, guidelines and reports.
• Provide appropriate levels of ongoing training and support to the Contracting
Authorities' staff in relation to use of the Purchasing Card and operation of
accounts.
• Attendance at meetings with the Contracting Authorities as and when required,
within reasonable notice.
• Attendance at management review meetings with the Lead Contracting Authority
to assess performance under this Framework Agreement, within reasonable notice.

The Contractor(s) should ensure that Services will be maintained at the same quality and
level with suitably qualified personnel, where staff changes occur.

The Contractor(s) will be expected to develop a communications strategy for contract

management, which should provide resources for dispute resolution and issue escalation.

The strategy is expected to include a proposal for communicating on each of the following
requirements:
• Financial transactions
• Software performance
• Card functionality
• Security protection

The Contractor(s) will be expected to develop and improve the purchasing card
programme through the lifetime of the contract. In particular, the Service Provider
should develop programme capabilities to meet the changing needs of the Contracting
Authorities. The requirements to be taken into account, include but are not limited to:

• strategies for responding to changing legislation

• strategies for responding to changing audit requirements
• strategies for responding to changing financial management requirements

The Contractor(s) will be required to develop an exit strategy specific to each Framework
Client upon expiry / termination of any contract with a Contracting Authority established
under the Framework Contract.

The Contracting Authorities require a number of management reports that can be

interrogated in order to meet strategic requirements.
24
The Contractor(s) must report, via email, details of the award of any Client Contract put in
place pursuant to the Framework Contract. Where required, reports must be dispatched
electronically via secure email in excel format. The Contractor(s) must maintain and
provide statistical and management information in relation to the provision of the Services.

Reports shall be accessible through a secure, web-based service that enables Contracting
Authorities to access and download management information on-line, for the management
and control of expenditure. All management information must be available on a daily,
weekly or monthly basis, upon request by the Contracting Authority(s).

All historical management information must be made available to the Lead Contracting
Authority and individual Contracting Authorities for seven years from the transaction date.

The Contractor(s) is expected to provide a consolidated monthly analysis summary report

of the following to Contracting Authority:

• Contracting Authorities details

• Total number of Purchasing Cards issued
• The number of new cards issued per month
• Volume of transactions per month
• Total through-put for the given period (including VAT)
• Aggregate Volume of transactions
• Aggregate through-put spend

The Contractor(s) should provide each Contracting Authority access to the following
information in relation to their Card Programme:

• Contracting Authority’s cardholders

• Number of active and inactive Purchasing Card users on individual programmes
• Total number of Purchasing Cards issued
• The number of new cards issued per month
• Volume of transactions per month
• Individual Cardholder data
• Average spend/throughput for a given period
• Total spend (including VAT)
• Exception Reports
• Summary monthly merchant category reports
• A monthly summary report for each Contracting Authority showing information
on all transactions
• Transaction volumes and spend by supplier
• Purchasing Card suspension/cancellations
• Lost Purchasing Cards
• Reports on transaction savings based on the model, if provided, by the Contracting
Authority
• Monthly activity reports demonstrating interactions with Contracting Authorities,
potential clients and the Lead Contracting Authority
• Reporting on Card Issuance and Help-Desk.

25
Contracting Authorities will require a summary report (from the on-line system) showing
the total number and value of transactions, by merchant, and all information captured, for
compliance [INSERT COMPLIANCE REGULATION].
The report must be exportable in excel format so that all other requirements in Section 3
of the above document can be accommodated, by the Contracting Authority. This will not
be evaluated.
Contracting Authorities will require a report (from the on-line system) that will facilitate
Purchasing card VAT reclaim for appropriate transactions in compliance with [Art.238
of Directive 2006/112/EC OR ANY OTHER TO INSERT]. This will not be evaluated.

Some additional reports may be required during the lifetime of the Framework Contract.
If such additional reports are necessary, the Contracting Authority undertakes to limit
them to the absolute minimum, where possible. The Contractor(s) shall identify any
additional reports available, free of charge, to Contracting Authorities.

In line with the over-arching strategic objectives of the European Union (e.g. the Green
Deal), the Contracting Authority is committed to minimising the environmental
impact and optimise the social benefit of products and services procured.

A good Sustainability Management System relevant to these services typically would

address environmental, social, cultural and economic issues, as well as quality of
services, human rights, health and safety, risk and crisis management as well as
including a process for monitoring continuous improvement and a communications
plan. The Contractor(s) must commit to provide the Contracting Authority with
information in relation to the contractors Sustainability Management System, on an
annual basis. This may form an agenda item for discussion at Management Review
Meetings.

The Contractor(s) shall be required to report, on an annual basis, on how the Purchasing
Card programme is assisting in achieving broader strategic objectives of the Contracting
Authority.

2. Suggested Selection Criteria

• Minimum Turnover: €3 million per year on card payments services
• Previous Experience: Provision of card programmes to large organisations
similar to that of this specification
• Central Bank Regulation [if relevant]: Tenderers must confirm that they are
regulated by the Central Bank of their country of operation for all services
as set out in this RFT document at the tender submission deadline and also
provide their Central Bank Financial Services Provider reference, or
equivalent.
• Acceptance of Payment from Contracting Authorities By Both Direct Debit
And Electronic Funds Transfer (EFT): The Contactor(s) must be able to
accept payment from Contracting Authorities by both direct debit and
electronic funds transfer (EFT). Tenderers must confirm the Acceptance of
Payment from Contracting Authorities by Both Direct Debit and Electronic

26
 Funds Transfer (EFT). Contracting Authorities will select the payment
method of their choice.

3. Suggested Award Criteria

• Provision of the Service
A) Tenderers must detail how they will assist the Contracting Authority to
determine the best card payment solution for their operations; this
should include a framework to enable the Contracting Authority to
decide on the use of physical cards, virtual cards, a mix of both, or an
alternative card payment system
B) Availability of a pre-approval before settlement of the supplier invoice
C) Tenderers must propose how they will roll out a card payment solution
to the Contracting Authority
D) Tenderers must detail how they will ensure continuity of the service, for
example during technological incidents, staff absenteeism, etc.
E) Tenderers must provide detail on the IT systems that will be used to
support the card payment solution

• Contract and Account Management

A) Tenderers must provide information on how they will train Contracting
Authority staff in the use of any IT systems necessary for the support of
the card payment
B) The proposed methodology for communication, both internally and
with the Contracting Authority, for the collection of information linked
to day-to-day operations, as well as the overall framework management
C) The proposed methodology for the management and positive resolution
of any problems encountered, including how these will be
communicated with the Contracting Authority

• Sustainability
A) Tenderers must propose how they will help the Contracting Authority
to meet the needs of the European Green Deal in reducing the overall
negative environmental impact of the contract.
B) Tenderers must propose how they will incorporate social clauses into
the contract throughout the service provision.

• Evolution and Innovation

A) Tenderers must provide a proposal to ensure the long-term viability of
the contract, including how they will adapt and evolve to market
changes, including regulatory and technological advances.

27