Indiana Convenience Fee Disclosure: Rules, Caps, and Penalties

Indiana’s convenience fee disclosure rules come from three places at once: the state’s Deceptive Consumer Sales Act, specific statutes capping fees on government and BMV transactions, and the Visa and Mastercard rules that bind any business accepting cards. The common thread is straightforward. A customer must know the exact amount of the fee before they authorize the payment, and a business that hides the charge in fine print, on a confirmation screen, or on the receipt is exposed to enforcement by the Attorney General, private lawsuits, and loss of card-processing privileges.

Surcharge or Convenience Fee

The label matters because different rules attach to each. A surcharge is an extra amount added specifically when a customer pays with a credit card, meant to offset the merchant’s processing costs. Surcharges apply only to credit cards, never to debit or prepaid cards. A convenience fee is a charge for using a payment channel the business treats as nonstandard, such as paying online or by phone when the standard method is in person or by mail. Convenience fees can apply to more than one payment type.

Indiana does not ban credit card surcharges. Businesses may impose them, subject to the card network caps and disclosure requirements described below. Mislabeling one as the other is a common source of trouble, because the disclosure obligations and the caps differ.

What Proper Disclosure Looks Like

The Deceptive Consumer Sales Act, codified at IC 24-5-0.5, prohibits any unfair, abusive, or deceptive act in connection with a consumer transaction, whether it happens before, during, or after the sale. Among its enumerated deceptive acts is misrepresenting that a transaction does or does not involve certain costs when the supplier knows otherwise.¹ The fee itself may be perfectly legal. The failure to tell the customer about it is what creates liability.

The statute sets the standard at a general level: the customer must not be misled. Vague warnings like “additional charges may apply” don’t meet it. What works in practice depends on the sales channel.

In-Person Transactions

Post signage at each customer entrance and near the register or payment terminal. The sign should identify the fee (surcharge or convenience fee), state the exact dollar amount or percentage, and specify which payment methods trigger it. Card network rules independently require signage at both the entrance and the point of sale. The notice needs to be legible from a normal standing distance, not tucked under the counter.

Online and Phone Transactions

For e-commerce, the fee has to appear on the checkout page before the customer clicks to pay or enters payment information. A charge that only surfaces on a confirmation page after processing is too late. Pop-up disclosures or clearly labeled line items on the payment summary both work, so long as the customer sees the amount before authorizing. For phone orders, state the fee amount verbally before running the card and follow up in writing or by email.

Written Agreements

For recurring services or higher-value transactions, folding the disclosure into the written agreement is the safest route. Indiana’s BMV convenience fee statute offers a strict model worth borrowing even when it doesn’t apply: a standalone notice stating the exact amount, presented separately from other terms, with the customer’s written or electronic consent.²

Caps on Government and Utility Payments

When a customer pays a city, county, or municipally owned utility by credit card, Indiana law caps the convenience fee. A political subdivision that accepts card payments may collect a convenience fee of no more than three dollars per transaction, and the fee must be the same regardless of card brand.³ The local government’s fiscal body must authorize card acceptance before any fee can be collected.

Separately, the political subdivision may collect an “official fee” to cover the actual transaction charge billed by the card vendor, but that fee cannot exceed what the vendor actually charges.³ Government offices typically pass through a small fixed amount rather than a percentage.

BMV Third-Party Provider Requirements

Indiana’s most detailed convenience fee disclosure rules sit in IC 9-14.1-3-3, which governs full service and partial services providers of BMV transactions. A provider that charges a convenience fee must:

Give the customer written or electronic notice of the fee, either directly or through the dealer handling the transaction.
State the fee amount in the notice, tell the customer that no convenience fee applies at an official license branch, and provide the address, hours, and distance of the nearest branch.
Obtain the customer’s written or electronic agreement to pay before collecting the fee.
Present the notice as a standalone document with no additional terms, other than the agreement to pay itself.

The fee amount also requires written approval by the BMV commission and cannot exceed statutory caps.²

Visa and Mastercard Rules

For most private businesses, the day-to-day rules come from the card networks. Violations won’t produce a state court case, but the payment processor can impose fines or terminate the merchant account, which for many operators is the sharper risk.

Visa

Visa caps credit card surcharges at the lower of 3% or the merchant’s actual discount rate for that card.⁴ Surcharges cannot apply to Visa debit or prepaid transactions. Merchants must post signage at the store entrance and at the point of sale, and the surcharge amount must appear on the transaction receipt.

Mastercard

Mastercard’s cap is 4%, with similar disclosure obligations. Merchants must give Mastercard and their acquirer at least 30 days’ advance notice before implementing a surcharge, disclose the amount at the point of interaction, and print the dollar amount on the receipt.⁵ Debit and prepaid Mastercard transactions cannot be surcharged.

These caps govern surcharges. True convenience fees, meaning fees for a nonstandard payment channel, aren’t subject to the same percentage limits, but they still have to be disclosed before the customer completes the transaction.

Penalties for Nondisclosure

The Indiana Attorney General can bring enforcement actions for deceptive practices involving undisclosed fees. Under the Deceptive Consumer Sales Act, the AG can seek injunctions, require the business to place money in escrow for distribution to affected consumers, recover investigation and prosecution costs, and request suspension of the business’s retail merchant certificate.⁶

For incurable deceptive acts, the statute authorizes a civil penalty of up to $500 per violation.⁷ Each improperly disclosed transaction can count as a separate violation, so a business processing hundreds of card payments a week can accumulate real exposure quickly. The AG can also accept voluntary compliance agreements that include investigation costs and consumer restitution.⁸

On top of state action, Visa and Mastercard fine merchants through their processors and can pull card acceptance entirely for repeat or serious violations.

What a Consumer Can Do

A customer charged an undisclosed convenience fee can file a complaint with the Indiana Attorney General’s Consumer Protection Division, which may investigate or pursue enforcement.⁹

Direct suit is also available. Under IC 24-5-0.5-4, a consumer who relies on an uncured or incurable deceptive act can recover actual damages or $500, whichever is greater. If the court finds the deception was willful, the award can rise to three times actual damages or $1,000, whichever is greater. Reasonable attorney’s fees may be awarded to the winning party, which makes smaller claims economically viable. When the same undisclosed fee practice affects many consumers, a class action is available on behalf of everyone similarly harmed, subject to Indiana’s class action procedural rules.⁶

One Note on Sales Tax

Businesses charging convenience fees or surcharges should also check the sales tax treatment. Many states treat separately stated processing fees as part of gross receipts subject to sales tax when the underlying sale is taxable, on the reasoning that the fee is part of what the customer must pay to complete the purchase. Because state positions vary, Indiana businesses should confirm the current view of the Indiana Department of Revenue for their specific fee structure before excluding these amounts from tax calculations.

1
Indiana General Assembly. Indiana Code 24-5-0.5-3 – Unfair, Abusive, or Deceptive Acts, Omissions, or Acts Prohibited; Enumeration of Deceptive Acts
2
Indiana General Assembly. Indiana Code 9-14.1-3-3 – Convenience Fees
3
Indiana General Assembly. Indiana Code 36-1-8-11 – Payment by Financial Instrument
4
Visa. U.S. Merchant Surcharge Q and A
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Mastercard. Mastercard Credit Card Surcharge Rules and Fees for Merchants
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Indiana General Assembly. Indiana Code 24-5-0.5-4 – Actions and Proceedings; Damages; Injunctions; Civil Penalties; Offer to Cure; Violations Involving Debt Collection
7
Indiana General Assembly. Indiana Code 24-5-0.5-8 – Incurable Deceptive Act; Civil Penalty
8
Justia. Indiana Code Title 24, Article 5, Chapter 0.5 – Deceptive Consumer Sales
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Indiana Attorney General. File a Complaint