Indiana Credit Card Surcharge Laws

Quick Summary:

• Credit card surcharging is fully legal in Indiana with no state-specific restrictions
• Federal regulations apply: maximum 4% surcharge cap, cannot exceed actual processing costs
• Pending legislation may prohibit surcharges on government services like BMV transactions by 2027
• Current government services (BMV) charge convenience fees: $0.40 + 2.06% for online/branch, 2.15% for phone
• Consumer complaints can be filed with Indiana Attorney General's Consumer Protection Division

Indiana maintains a business-friendly approach to credit card surcharging, allowing merchants to offset processing costs without additional state restrictions beyond federal guidelines. The state's straightforward regulatory environment makes it attractive for businesses working with Nickel that need flexibility in payment processing strategies. However, proposed legislation may change the landscape for government service payments, reflecting growing consumer advocacy around convenience fees.

Indiana's approach balances business needs with consumer protection, though recent legislative proposals show evolving attitudes toward government-imposed payment fees.

Legal Disclaimer: This information is for reference only and does not constitute legal advice. Consult with an attorney before implementing any surcharge programs, as federal and card network rules still apply.

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Is Credit Card Surcharging Legal in Indiana?

Yes, credit card surcharging is completely legal in Indiana. The state has no laws prohibiting or restricting credit card surcharges, allowing businesses to follow federal guidelines and card network requirements.

Indiana merchants can implement surcharges up to the federal 4% maximum or their actual processing costs, whichever is lower. Card networks like Visa typically limit surcharges to 3%, while Mastercard, American Express, and Discover allow up to 4% depending on actual processing fees.

The state's permissive approach extends to all business types and transaction channels, making Indiana one of the most straightforward states for surcharge implementation. This regulatory simplicity has made Indiana attractive for businesses seeking to offset rising payment processing costs.

What's Allowed

Indiana businesses can implement comprehensive surcharge programs including:

• Standard credit card surcharges up to federal limits or actual processing costs
• All transaction types - in-person, online, and telephone transactions
• Brand-level or product-level surcharges with proper disclosure and registration
• Dual pricing models showing separate cash and credit card prices
• Convenience fees for alternative payment channels when properly structured
• Service fees when compliant with card network rules

What's Not Allowed

Indiana businesses must avoid these prohibited practices:

• Debit card surcharges - prohibited under federal law regardless of processing method
• Excessive surcharges - cannot exceed actual processing costs or federal/network caps
• Profit-making surcharges - fees must reflect costs, not generate additional revenue
• Undisclosed surcharges - customers must be notified before payment completion
• Prepaid card surcharges - similar restrictions as debit cards under federal law

Penalty For Non-Compliance

Indiana enforces surcharge compliance through existing consumer protection mechanisms:

• Federal card network fines ranging from $1,000 to $1 million for violations
• Consumer complaint investigations through the Indiana Attorney General's Consumer Protection Division
• Deceptive Consumer Sales Act violations for misleading fee practices
• Processing agreement termination by payment processors for non-compliance

Consumers can file complaints about improper surcharging by contacting:

Indiana Attorney General Consumer Protection Division
Government Center South, 5th Floor
302 W. Washington Street
Indianapolis, IN 46204
Email: complaints@indiana.gov
Fax: 317-233-4393

Proposed Changes to Government Service Fees

State Senator Fady Qaddoura (D-Indianapolis) has proposed legislation that would eliminate credit card convenience fees for government services, particularly targeting charges at the Indiana Bureau of Motor Vehicles (BMV). Currently, the BMV charges:

• Online/Branch transactions: $0.40 + 2.06%
• Phone transactions: 2.15% for credit cards, 1.5% for debit cards

If passed, this legislation would not take immediate effect, as current contracts with payment processors don't expire until 2027. The proposal reflects growing consumer advocacy around "double-charging" taxpayers who fund government services through taxes and then pay additional fees to access those services.

While this legislation specifically targets government services, it demonstrates evolving attitudes toward payment fees that could influence broader surcharge discussions in Indiana.

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Indiana Credit Card Surcharge FAQs

Are there any proposed restrictions on private business surcharging in Indiana?
Currently, no legislation targets private business surcharging in Indiana. The proposed changes focus exclusively on government service fees, particularly at agencies like the BMV. Private businesses retain full flexibility to implement surcharges following federal guidelines and card network rules.

How do Indiana's surcharge laws affect B2B transactions?
Indiana's permissive approach applies equally to B2B and B2C transactions. However, for businesses processing large invoice-based payments like wholesale distributors and contractors, Nickel's free ACH processing may be more cost-effective than credit card surcharging, especially for transactions over $10,000 where percentage-based surcharges become significant.

Can bookkeepers and accountants in Indiana help clients implement surcharge programs?
Accounting professionals can advise clients on the financial implications of surcharging and help with documentation, but should recommend legal counsel for compliance details. Indiana's straightforward laws make implementation relatively simple, but businesses still need to ensure proper notification procedures and stay within actual processing cost limits.

What disclosure requirements apply to Indiana businesses?
Indiana follows federal disclosure requirements without additional state mandates. Businesses must clearly notify customers about surcharges before payment completion through signage, verbal notice, or payment system displays. The method is flexible as long as disclosure is clear and conspicuous, making Indiana more business-friendly than states with specific posting requirements.

How will the proposed government fee elimination affect private businesses?
The proposed legislation only affects government agencies and wouldn't directly impact private business surcharging rights. However, if passed, it could influence public perception of payment fees and potentially encourage more consumers to seek businesses that don't surcharge, creating competitive pressure rather than regulatory restrictions.

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