Surcharge fees are a hot topic in Indiana.
Whether you’re a business owner considering a surcharge program or a consumer who wants to understand your rights, this guide covers everything you need to know about Indiana’s stance on credit card surcharging.
Disclaimer: This information is for reference only, and it does not constitute legal advice. Consult with an attorney for any legal-specific questions.
Are Credit Card Surcharge Fees Legal in Indiana?
Yes, credit card surcharging is completely legal in Indiana.
Unlike other states that either prohibit surcharging or limit how much these fees can be charged, Indiana has no state-level laws that restrict or ban credit card surcharging.
This framework makes Indiana one of the most straightforward states for businesses wanting to implement surcharge programs. Merchants can add fees to credit card transactions, as long as they comply with federal regulations and card network rules.
The federal government caps surcharges at 4% of the transaction amount. But card network rules typically create a lower limit (even though the card networks don’t have “laws” in the legal sense).
Since Visa restricts surcharges to 3% while others allow up to 4%, the fact that all cards must be treated equally effectively caps surcharges at 3% across the board.
Is Debit Card Surcharging Legal in Indiana?
No, debit card surcharging is illegal in Indiana (just as it is in all 50 states).
Federal law specifically prohibits surcharges on debit card transactions through the Durbin Amendment of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The prohibition applies regardless of how the debit card gets processed. Even if the transaction is run as a credit, businesses still can’t add a surcharge fee to debit cards.
This also extends to pre-paid cards, government benefit cards, and ACH transfers. Businesses can only apply surcharge fees to credit cards.
Surcharging Compliance Requirements for Indiana Businesses
Even though Indiana doesn’t impose state-specific surcharge restrictions, merchants must still follow several compliance requirements to legally implement surcharge programs. The guidance below is based on federal rules and card network requirements.
Card Network Notification
Before you can start surcharging credit cards, you must notify the card networks in writing to inform them about your intention. Most networks require 30 days’ advance notice.
Don’t rely on your processor to handle this notification process on your behalf.
It’s 100% your responsibility to this. And your processor won’t be in trouble if you’re violating card network rules, state laws, or federal laws. So you need to take all accountability here.
Point-of-Sale Disclosures
Clear disclosure is essential for legal surcharging in Indiana. Businesses must inform customers about surcharge fees before they complete the transactions.
For brick-and-mortar businesses, this means posting clear signage at:
- Your entrance
- All points of sale
- Anywhere customers might see prices or initiate transactions
The idea here is that you can’t hit consumers with any surprise fees when it’s time to pay. They need to be made aware of any excess charges ahead of time.
Your disclosures should be obvious and nearly impossible to miss, with a detailed explanation of exactly what’s happening. Include:
- The exact percentage or dollar amount of the surcharge.
- An indication that it only applies to credit card transactions (not debit cards).
- That the merchant (not the card company) is assessing the fee.
Online businesses are also subject to disclosure notices for any surcharges. These should appear on the checkout page or the first page where credit cards are mentioned.
Receipt Transparency
Indiana merchants need to show surcharge fees as a separate line item on customer receipts.
You can’t simply build the surcharge into your prices in an attempt to hide or conceal it. All surcharge fees need to be clearly identified as an additional fee.
Proper receipt formatting and itemization help consumers understand what they’re paying and ensure compliance. Your POS system should automatically format receipts this way when you configure them for your surcharge program.
FTC Guidelines
You should also follow all Federal Trade Commission Guidelines and consumer protection principles if you’re implementing a surcharge program at your Indiana business.
Generally speaking, this means that your surcharge program must be:
- Clearly disclosed and not deceptive
- Apply consistently across all customers
- Limited to actual processing costs
- Include the total price a customer has to pay, including all mandatory fees
Refer to the latest FTC junk fee rule for more information.
Potential Legislative Changes on the Horizon
There aren’t currently any bills in the legislative pipeline to address Indiana’s surcharge laws. However, there have been rumors from local news outlets saying that lawmakers have eyed changes to surcharging in Indiana, particularly on government services (like transactions at the BMV).
But these changes wouldn’t go into effect until 2027. So we’ll continue monitoring these stories and see if there’s any truth to these rumors.
Changes are definitely possible, as we’ve seen other states update their stance on surcharging in the last couple of years. Most of these changes come in the form of stricter policies.
Indiana’s Surcharge Laws Compared to Other States
Indiana is among the majority of states that allow surcharging without additional restrictions.
Some states (like Connecticut and Massachusetts) ban surcharging entirely. While other states impose unique caps or disclosure rules.
But overall, Indiana businesses definitely have more flexibility compared to businesses in other states. Just be aware that if you’re running an online business based in Indiana, you need to apply surcharge laws based on where the customer is located.
For example, if you’re selling to a customer in California, then the total cost a customer will pay (including surcharge fees but not including taxes) must be in the advertised price. Whereas if your customer is located in Connecticut, they can’t be surcharged at all.
Check out our guide on the surcharge laws in all 50 states for more information.
How to Report Illegal Surcharging in Indiana
If you suspect that a business in Indiana is illegally surcharging transactions, you can report them online to the Consumer Protection Division of the Attorney General’s office.
Use this link, and navigate to the Consumer Complaint Form.
Since surcharging credit cards is legal, common violations would include surcharging on debit cards, surcharges that exceed 4% of the transaction, or deceptive surcharging without proper disclosures.
You can also drop a comment on this page to let us know if you’ve encountered any surcharges in Indiana, and tell us how you feel about them.
Final Thoughts
Despite it being legal, surcharging doesn’t always make sense for businesses in Indiana.
When you start weighing the pros of surcharging against the cons, you quickly realize that the benefits aren’t really worth it.
Aside from dealing with the card network rules and federal laws to maintain compliance, you’re also tasked with the job of passing costs to your customers without losing them. This is much easier said than done.
All of the research points to customers hating surcharge fees. So while you might be able to recoup an extra $0.50 or $1.25 on each sale, that dollar could cost you a customer. Through that lens, is it really worth it? For most businesses, the answer is no.
Instead of passing your operating expenses to your customers in the form of a surcharge, you should address the issue at the source—high processing fees.
Here at MCC, we can help Indiana businesses lower their costs on credit card processing. Best of all, you won’t have to switch providers or change any of your operations. Let us handle the negotiations on your behalf so you can focus on running your business.
Get a free audit today to find out how much you can save.