After an intense few days of lobbying by retailers, banks and the payments industry -- including ETA --the Vermont Senate has passed a milder version of a bill to regulate interchange fees.

The measure, which is believed to be the first of its kind in the nation -- now goes to the Vermont House, where the battle over interchange is likely to heat up over the next few weeks.

The original version of the legislation would have:

Prohibited credit card companies from charging merchants more for specialty cards, such as ones that result in frequent flyer miles;

Prohibited the companies from stopping stores from discounting merchandise for customers using cards with lower fees;

Prohibited companies from forcing merchants to accept a card at all their store locations; and

Allowed merchants to set up a minimum or a maximum transaction amount that they will accept.

The bill also contained a provision that sets up a criminal penalty of 10 years in prison or a $10,000 fine for the use of so-called credit card skimming devices – equipment that looks like a traditional card swipe (such as one found on an ATM), but actually copies a person's credit card information and sends it to a scammer.

The version passed March 31 deleted a provision to end default interchange rates and instead ordered a study to be conducted by the VT Dept. of Banking. The study is due next year. The amended bill also deleted language that would have allowed merchants to favor one card over another.

As the legislation was debated, ETA and other payments industry organizations warned the Vermont lawmakers that their action could have severe unintended consequences for the state's banking and payments industruies. And while not successful in blocking the bill, the lobbying campaign "raised many doubts about the bill," according to one lobbyist, and that may have some impact when the measure moves to the House.

You can read the text of ETA's letter here .