Vermont Governor Jim Douglas has the power to make his small state the first in the country to pass a measure that could significantly impact the amount of card interchange earned from card transactions.

Both chambers of the Vermont legislature have passed a measure, which would prevent merchants with a physical presence in the state from any penalties from the card brands for refusing to accept cards as payments for purchases of less than $10.00. The legislation would also allow merchants to offer discounts for the use of cash instead of cards and to decide not to take cards at all of their locations.

The Vermont Credit Union Association reported to its members that the measure passed despite its strong opposition but said it was better than the legislation that had been originally proposed. The Association also reported that Douglas was expected to sign it, but a spokesman for the Electronic Payments Coalition, which opposed the measure, was not as sure.

"This bill would force customers to carry cash, and permit merchants to reject a customer at the register if they don't," said Trish Wexler, EPC spokesman. "A particularly striking example are those in VT who receive state benefits on prepaid cards. If they go to a convenience store to buy only what they need-a gallon of milk, a loaf of bread-they will be forced to buy more in order to use their card," she pointed out.