Vt. Interchange Bill Makes Progress
With federal legislation on credit and debit card interchange appearing dead in the water this year, attention on the issue has focused on the state of Vermont where legislation addressing card interchange and card practices has passed the state Senate.
S. 138 is now headed to the Vermont House. The measure also prohibits any fines on merchants for advertising lower prices for using cash or for refusing to take all cards at given locations.
"The Vermont Senate's action could be the start of a national movement," suggested Jim Harrison, president of the Vermont Grocers' Association in a statement hailing the Senate move.
Vermont credit unions have yet to issue a formal statement about the bill's passage but reported the topic was high on the list of legislative priorities when credit union executives met with legislators late last week.
The Electronic Payments Coalition, a group made up of card brands and card issuers, both banks and credit unions, has also not yet released a formal comment on the bill's passage but previously opposed it on consumer protection grounds.
"This amendment would allow merchants to set minimum and maximum transaction amounts for all debit, credit and charge card transactions, permitting them to reject a customer's card," the coalition said. "Consumers would be forced to carry cash in order to avoid being stranded with no way to pay for the check at the end of a meal or a necessary purchase at a convenience store."
The coalition mentioned an amendment to the bill because that was the approach legislators supporting the measure took to introduce the legislative language. S. 138 had been introduced strictly as a consumer protection bill aimed at individual cardholders in disputes with card issuers. But that original legislative language was stripped out and replaced with the interchange language as a single amendment.
Negotiations to pass the measure removed some of the language that would have allowed merchants to not accept certain credit cards that they believed carried the highest interchange fees, often those with rewards programs attached to them.
"Today is a significant victory for Vermont's small businesses and their customers, and we applaud the Vermont Senate for standing up to the big banks and credit card companies to get this done," Jennifer Hatcher, group vice president at the Food Marketing Institute, said in a statement. "The unanimous passage of this legislation means Vermont is a large step closer to demanding fairness, competition and transparency from the credit card companies." She added: "Credit card swipe fees are one of the largest expenses small businesses face, and these huge, hidden fees hurt small businesses and consumers at the very time we're relying on them to rebuild our economy."
Lyle Beckwith, the senior vice president of government relations for the National Association of Convenience Stores, said, "The consumer-friendly legislation passed through the Vermont Senate addresses unfair practices by the nation's largest financial institutions that cost Americans $48 billion in credit and debit card swipe fees alone."
"We applaud the Vermont Senate for standing up to the out-of-control credit card industry and telling them, enough is enough."
The Vermont Credit Union Association has not commented on the bill's passage but reported that credit union executives have been pressing their concerns about it with House legislators.
According to the association, Rep. Michael Marcotte (R- Newport), vice-chairman of the House Commerce Committee, promised credit union executives that he "would ensure that commerce received extensive input from all concerned parties and thoroughly studied the possible consequences of the legislation before voting upon it" when it came before his committee.