Vermont Governor Jim Douglas has the power to make his smallstate the first in the country to pass a measure that couldsignificantly impact the amount of card interchange earned fromcard transactions.

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

The Vermont Credit Union Association reported to its membersthat the measure passed despite its strong opposition but said itwas 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, whichopposed the measure, was not as sure.

"This bill would force customers to carry cash, and permitmerchants to reject a customer at the register if they don't," saidTrish Wexler, EPC spokesman. "A particularly striking example arethose in VT who receive state benefits on prepaid cards. If they goto 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 usetheir card," she pointed out.