Starting Jan. 1, Vermont merchants will be able to set spending minimums for debit and credit card payments under a bill that became law last week despite concerns from the state's governor.

With enactment, Vermont is the first state to regulate card use, as national debate rages over interchange fees.

The Vermont law, which passed the state General Assembly unanimously this month, prohibits card networks from fining merchants for imposing up to a $10 minimum for card payments. The card networks, which opposed the legislation, prohibit the practice.

The law also prohibits fines against merchants for discounting for one payment type over another and clarifies that retailers may accept cards at one of their stores and not at another site operated by the same company.

Gov. Jim Douglas let the bill become law without his signature, noting that it had unanimous support in the Legislature.

In a letter Friday to David Gibson, the secretary of the state Senate, Douglas said he understands and sympathizes "with the frustration and concern of Vermont's merchants regarding credit card fees, credit card rules and interchange fees imposed upon them without the opportunity to negotiate terms."

However, card regulation is a "national, if not an international, issue that is best addressed in a wider forum," he wrote, noting that Congress took up the issue in an amendment to the financial regulatory reform bill that passed the Senate last week. The law could also prompt electronic payment systems providers to pull out of the state or limit the ways people could use their cards, he said.

State Rep. Michael Marcotte, a Republican who supported the bill and owns a convenience store in Newport, said in an interview Monday that he does not anticipate its driving business out of the state.

"We have stores throughout Vermont that already post a minimum even if it's against their merchant agreement, and it hasn't hurt anything," Marcotte said.

He said he is still deciding whether to impose a minimum when the law's main provisions take effect. It also includes a ban on "skimming" devices that fraudsters use to steal card data. This took effect upon enactment.

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