Electronic Commerce Initiative

The State's E-Commerce program primarily involves two methods to disburse and receive payments: 1) Electronic Funds Transfer (EFT); and 2) Merchant Cards (credit and debit cards). With the passage of Senate Bill 222 in 1999, the Office of the State Controller (OSC) assumed the lead role in expanding the State's electronic commerce program on a statewide enterprise basis. Prior to that time, ecommerce programs that existed were developed by the various agencies, independently of each other, as there were no statewide enterprise solutions offered by the State.

The Department of State Treasurer (DST) had provided guidance to the agencies as they developed their separate programs. DST had focused primarily on encouraging agencies, universities, community colleges, and local school systems to develop programs to offer direct deposit of payroll, which utilizes EFT services. The State first began using direct deposit for payroll in the late 1970s. Much success had been achieved through the efforts of DST in developing direct deposit programs over the next 20 years, as DST was able to absorb the cost of the banking transactions through its banking arrangements. However, only a few of the agencies had developed a merchant card program during this time period, and the ones that did, only accepted card-present cards (face-to-face transactions).

In 2000, after passage of SB 222, the emerging utilization of the Internet to allow online payments via merchant cards and EFT prompted the need for a statewide enterprise solution. To meet this need, the State deemed it appropriate to: 1) develop a Common Payment Service gateway to accommodate those agencies that were developing Web-based payment applications; and 2) establish master agreements with service providers (merchant card processor and EFT processor) to process all types of electronic payments, both online payments and face-to-face transactions. The Office of the State Controller (OSC) assumed the role of establishing the statewide enterprise solution. The Common Payment Service (CPS) was developed by the Office of Information of Technology (with OSC being the business owner), and two vendors were secured by OSC as service providers through a competitive procurement process. During the first five years, the foundation for the statewide enterprise solution was laid, with early adopters contributing to a successful rollout.

In the spring of 2005, OSC renewed its emphasis on the ecommerce program. The tasks to be performed under the renewed emphasis included: 1) securing a new master services agreement for Electronic Funds Transfer services; 2) securing a new master services agreement for Merchant Card services; 3) establishing arrangements with proprietary card companies (i.e.., American Express and Discover); 4) updating and developing ecommerce related policies for agencies; 5) developing an educational resource for agencies through OSC's Website; 6) developing a program to assist agencies in becoming and remaining compliant with the new PCI Data Security Standard; and 7) preparing a comprehensive report on E-Commerce to be presented to the General Assembly in April 2008.

The E-Commerce Task Force Report published in April 2008 provides the foundation upon which the State's ecommerce program can be further built upon. The report: 1) provides an assessment of the current environment; 2) examines best practices in ecommerce; 3) identifies issues relating to funding and fees; and 4) provides recommendations regarding how the State's ecommerce program can be enhanced and expanded. While some of the recommendations in the report can only be pursued if legislation is enacted, some recommendations can be pursued without additional legislation.