MONTPELIER, Vt.-Even as credit unions are gearing up for potential revenue losses due to the implementation of Regulation E, they're also facing a potential hit to the bottom line related to interchange reform efforts.
Credit unions in Vermont likely will be the first to feel it, as Vermont became the first state to pass legislation limiting the interchange fee on credit and debit card purchases, a week after the Senate approved a similar provision as part of the mammoth financial overhaul bill.
The Vermont law allows retailers to set a $10 minimum for credit and debit card charges and to offer a discount to shoppers who pay with cash starting Jan. 1.
Vermont lawmakers unanimously passed the legislation several weeks ago and then sent it to Gov. Jim Douglas (D) for approval. Douglas said that he would not sign the bill but also would not veto it, allowing it to become law without his signature.
Sympathy For Merchants
In a statement, Douglas said he sympathized with merchants, who have complained that the swipe fee often can eat up their profit on small purchases. But he worried that consumers' ability to use their cards would be restricted and that some card issuers and networks might limit their services in the state as a result of the new law.
"I do not believe . . . that legislation of this nature is best handled at the state level," Douglas said. Indeed, other states and Congress are watching Vermont, as one of the concerns is that proponents of interchange reform might try to force Congress' hand by launching a state-by-state battle on this issue.
