A Vermont House committee passed a bill April 27 that would prohibit card networks from fining merchants that set minimum amounts for accepting credit and debit cards from customers.

The Committee on Commerce and Economic Development voted 9-1 in favor of moving the bill to the full chamber, according to the panel’s chairman, Rep. William Botzow.

The House is expected to discuss and vote on the bill later this week. If passed, Vermont would be the first state to allow businesses to set a minimum dollar amount for accepting cards. Visa Inc. and MasterCard Worldwide prohibit retailers from setting minimum amounts for acceptance of their card products, though many merchants, particularly bars and liquor stores, ignore the rules.

Similar bills are pending in Georgia and at the federal level.

The Vermont bill has attracted support from the National Retail Federation and other merchant trade groups, which contend rising interchange expenses are squeezing businesses’ profits and are forcing consumers to pay higher prices for goods.

Besides allowing merchants to set a minimum of up to $10 for card purchases, the Vermont bill also would let retailers with multiple locations to accept cards at one store and not another.

“For me the significance is we help our small merchants in a very tough time,” Botzow says. “It also provides some understanding and transparency to the regular consumer” about the impact of “when they use a card.”

The Vermont Senate passed a version of the bill April 6, referring it to the House committee. If the full House passes the bill, it would go back to the Senate for approval of changes that have been made.

Trish Wexler, spokesperson for the Electronic Payments Coalition, a trade group that counts Visa and MasterCard as members, contends allowing merchants to set minimum amounts will harm consumers by forcing them to constantly carry cash.

The practice also is misleading, she says. “When a merchant has the ability to put that sticker in their window that says they accept one of the network’s brands, that brings them more customers, more revenue,” Wexler says. “By saying that you accept it but then fool the customer once they hit the register with a minimum payment is a bait and switch, and it’s false advertising on their part.”

Shawn Miles, MasterCard group head of global public policy, agrees, saying consumers will be forced to spend more to meet such minimums. “Our rule against minimums is really designed to protect the consumer,” he says.

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