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FROM THE FIELD

BEING A PIONEER IN MILITARY BANKING (Cont’d)
was as a faculty member at the U.S. Army War College. He is also a recipient of the MG Nathan
Towson Medallion and is a Distinguished Member of the Finance Regiment.
After retirement from the Army in 2010, Chip continued to serve as a civilian with the Defense
Finance & Accounting Service in Washington, DC and then as the Chief of Financial Operations for
US Army Security Assistance Command, New Cumberland, PA before his final retirement in 2019.

“BankAmerica” Travelers Checks
As previously mentioned, OMB’s ITMIP released its recommendations in 1980; the GAO endorsed
its recommendations in testimony to Congress in July 1981; and GSA awarded two contracts in
August 1983 to CitiCorp/Diners Club for travel cards and travelers checks.

Complementing OMB’s efforts, the Army identified several benefits specifically available by issuing
travelers checks in lieu of cash and Treasury check payments. These included the following:
• Reduce cash holdings (and cash acquisition expenses of O&M funds) by disbursing offices.
• Provide emergency reserve of “cash” to meet unexpected requirements.
• Reduce the number of Treasury checks issued by disbursing offices.
• Enable Treasury to achieve interest savings from “float” between time a Treasury check is
created to the time it is received by BA in San Francisco.
• Benefit from BA’s ability to generate interest income from “float” between the time a
Treasury check is received/deposited to the time travelers’ checks are redeemed.
• Provide greater safety and security to recipients who would otherwise receive cash, or a
Treasury check for travel advances, accrued per diem, or separation pay in the case of loss,
theft, or destruction.

Of course, there were some drawbacks of the travelers’ checks;
• Completing the Purchaser’s Agreement Form at time of issue required more time.
• Signing each travelers check required more time.
• Using travelers checks is not as convenient as using cash.
• Receiving travelers checks for payment was not universally accepted. (“I just can’t like it!”)

Believing the benefits outweighed the costs, the Army awarded a contract award to Bank of
America Cheque Corporation (BA) on November 1, 1983, to evaluate the concept. Ultimately, 18
Army Finance and Accounting Offices began issuing travelers checks as part of a six-month test.
The BA no-cost contract proved to be very unique: (1) It required BA to rebate a portion of its
interest earnings back to the Army, and (2) It contained a revenue sharing clause based on a
percentage value of travelers checks issued that considered the interest earnings from the
following:

• “Float” between the time BA received the Army payment for travelers checks issued and the
time when BA had to reimburse merchants who received the travelers checks from
customers.
• “Pool Balance” that represents the amount of travelers checks that have not been
negotiated or lost (which the recipient may or may not know about or report).

Starting in February 1984 articles started appearing in the Army Magazine,
Harrison Post, Army Times, and the Armed Forces Comptroller highlighting the travelers checks
test and eventual expansion world-wide.

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