As of March 2025, Managed Service Providers (MSPs) in Indiana are permitted to apply credit card surcharges to recover processing costs and improve cash flow. 

Instead of absorbing transaction fees entirely, surcharging allows MSPs to pass these expenses to clients in a transparent manner.

However, strict regulations govern surcharging practices. Indiana MSPs must comply with both federal rules and the policies of major card networks to avoid penalties, client disputes, and reputational damage.

This guide breaks down Indiana’s surcharging laws, compliance best practices, and how FlexPoint simplifies the process while keeping MSPs compliant.

Disclaimer: This guide is for informational purposes only and should not be considered legal advice. Consult a legal professional for specific guidance related to your MSP in Indiana.

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What is Credit Card Surcharging for MSPs in Indiana?

Credit card surcharging enables Indiana MSPs to offset processing fees by charging clients a small percentage per credit card transaction.

Typical credit card processing fees range from 2% to 4%, covering interchange fees, network assessments, and provider markups. Over time, these expenses add up, especially for MSPs with high transaction volumes.

Consider an MSP in Indiana handling $90,000 in monthly credit card transactions with an average 3% processing fee. 

This results in $2,700 per month in fees—meaning the MSP pays $32,400 in credit card processing fees annually.

Upon implementing a 3% surcharge, the MSP passes this cost to clients, recapturing nearly $32,400 annually in lost revenue. The MSP can then decide to reinvest those recovered funds or use them another way as they see fit. 

Some MSPs opt for a hybrid approach, applying a lower surcharge to clients while covering part of the fees themselves.

For example, an MSP might charge 1.5% while absorbing the remaining processing cost. 

If their monthly transactions total $90,000, this structure diverts $1,350 per month to clients while the MSP covers $1,350 internally, reducing yearly expenses by $16,200.

Regardless of approach, MSPs in Indiana must guarantee full transparency. 

The following sections outline Indiana’s surcharging laws and best practices for compliance and sustaining client satisfaction.

Understanding Credit Card Surcharging Laws in Indiana

ndiana permits MSPs to apply surcharges to credit card payments as of March 2025, but they must follow both federal regulations and individual card network policies to remain compliant. 

Surcharges are subject to limits, transparency requirements, and restrictions on certain payment types.

The maximum surcharge allowed under federal law is 4%.

However, MSPs cannot charge more than their actual processing costs. If an MSP pays 3% in processing fees, they cannot apply a surcharge exceeding 3%.

Visa limits surcharges to 3%, while Mastercard, American Express, and Discover allow up to 4%, as long as the surcharge does not exceed the MSP’s actual processing costs. 

For example, if an MSP’s provider charges 2.5%per transaction, that must be the cap on their surcharge.

Surcharges cannot be applied to debit or prepaid card transactions, even if those payments are processed as credit. This restriction comes from the Durbin Amendment of the Dodd-Frank Act, which prevents businesses from passing debit card processing fees to customers.

Again, transparency is also integral in Indiana’s surcharging laws. 

Before completing a transaction, MSPs must clearly disclose any surcharge applied. This means including surcharge details on invoices, receipts, and any payment screens where clients input their credit card information. 

MSPs should also be aware that they must notify credit card networks before implementing surcharges. Failure to follow notification procedures could result in penalties or the loss of processing privileges.

For Indiana MSPs, non-compliance carries risks beyond financial penalties. 

Payment disputes can be costly, with chargeback fees averaging $190 per case, according to Swipesum, in addition to the loss of revenue. Moreover, failing to follow regulations can lead to fines or even the revocation of payment processing capabilities.

To mitigate these risks, Indiana MSPs should conduct regular reviews of their surcharge policies, confirm that fees align with processing costs, and assure clients are fully informed about any applied surcharges. 

Maintaining compliance protects revenue streams while fostering long-term client relationships constructed on trust and transparency.

Implementing Credit Card Surcharging for Indiana MSPs

dding surcharges requires careful planning, unambiguous communication, and adherence to federal and card network policies. 

A well-executed surcharging strategy ensures compliance while minimizing client friction. Indiana MSPs must evaluate their business model, establish transparent policies, and integrate surcharge-friendly billing systems to maintain trust and efficiency.

Below is a step-by-step approach to successfully applying surcharges in Indiana, tailored to MSPs.

Step 1: Establish a Clear Surcharge Policy and Structure

A structured surcharge policy helps build client trust and ensures compliance. 

This policy should specify:

• The surcharge rate: The policy must clearly define the percentage or fixed amount that will be applied to credit card transactions, ensuring it does not exceed actual processing costs or card network limits.
• How fees are calculated: MSPs should outline the formula used to determine surcharges, whether it’s a flat fee per transaction, a percentage-based charge, or a tiered structure based on invoice totals.
• How charges appear on invoices: To maintain transparency and compliance, the surcharge should be listed as a separate line item on invoices, so clients understand exactly what they are paying and why.

Indiana MSPs can choose from different surcharge structures:

1) Fixed Percentage

A uniform surcharge on all transactions. 

Example: A 2.9% surcharge on a $15,000 invoice adds $435, bringing the total to $15,435.

2) Flat Fee

A set dollar amount per transaction. 

Example: A $50 surcharge on every payment, as long as it does not exceed processing costs.

3) Tiered Surcharge

Different percentages are based on transaction size. 

Example: 1.5% for transactions under $5,000 and 3% for transactions over $5,000.

Documenting the surcharge structure in client agreements ensures clarity and compliance.

With any structure, the fee a client is charged can never exceed what the MSP is charged for processing the payment. 

For example, if an MSP pays 2.8% in processing fees, they cannot apply a 3% surcharge. The maximum surcharge they can legally charge is 2.8%. Overcharging will result in penalties, client disputes, and potential legal consequences.

Step 2: Notify Credit Card Institutions and Clients

Before applying surcharges, Indiana MSPs must inform credit card networks such as Visa, Mastercard, American Express, and Discover. Each network has specific requirements for notification.

Visa requires at least 30 days' advance notice before a surcharge is applied. The notification process usually involves submitting a form through the network’s online portal. 

Visa’s policy explains:

“U.S. merchants must first notify Visa and their acquirer of their intent to surcharge at least 30 days before implementing surcharging. Merchants can submit a notification form to Visa.”

Mastercard, American Express, and Discover also have similar notification requirements.

As mentioned earlier, failure to notify networks properly can result in compliance violations and potential penalties. Without advance notice, an MSP may lose its ability to process credit card payments under favorable terms.

Equally important is notifying clients. If clients are not informed of surcharges before they appear on an invoice, disputes and chargebacks may follow. 

To ensure smooth implementation, MSPs should:

• Send an email announcement outlining surcharge policies.
• Update service agreements to reflect surcharge details.
• List surcharge details clearly on invoices and billing portals.

Step 3: Update Invoicing & Billing Systems

Once a surcharge policy is in place, invoicing and billing systems must be configured to display surcharges transparently. Surcharges should always appear as a separate line item on invoices so clients can see exactly how the fee is calculated.

For example, an invoice might list them this way:

• Service Charges: $11,200
• Surcharge (2.9%): $324.80
• Total Due: $11,524.80

Many Indiana MSPs use automated billing platforms to handle surcharge calculations accurately. FlexPoint’s billing system applies all surcharge fees correctly, reducing manual errors and compliance risks.

Automating surcharges also simplifies accounting and reconciliation. 

Instead of manually adjusting invoices, FlexPoint integrates surcharge details into financial records, helping MSPs maintain accurate tax and expense documentation.

Step 4: Monitor and Review Compliance

Indiana MSPs must conduct regular reviews to ensure surcharge policies align with state regulations, federal guidelines, and card network rules. Keeping surcharge policies up to date prevents overcharging and ensures continued compliance.

As of March 2025, Indiana follows federal surcharge guidelines, allowing MSPs to apply surcharges up to 4% of the transaction total. 

However, card networks impose their own limits, including Visa, which caps surcharges at 3%.

Mastercard, American Express, and Discover allow up to 4%, but only if actual processing fees justify the surcharge amount.

To maintain compliance, Indiana MSPs should:

• Review surcharge policies quarterly to adjust fees if processing rates change.
• Maintain records of surcharge-related client communications to protect against disputes.
• Stay current on rule changes from Visa, Mastercard, and regulatory agencies.

Many MSPs choose to work with legal and financial consultants to ensure they stay compliant with evolving surcharge regulations. With the right processes in place, MSPs successfully manage surcharges without disrupting client relationships.

The Role of FlexPoint in Streamlining Credit Card Surcharging

With FlexPoint’s multiple billing models, MSPs get to choose whether to absorb fees, split them, or pass them on to clients. This flexibility helps MSPs control costs without disrupting client relationships.

Payment Processing Plans

MSPs in Indiana have different approaches to handling processing fees. Some prefer to absorb the costs, while others pass them on through surcharging. 

FlexPoint provides two primary payment models, allowing MSPs to choose the best fit based on their pricing strategy and client expectations:

• Interchange+ Plan: The MSP absorbs processing fees and adjusts pricing accordingly.
• Customer Surcharge Plan: The MSP applies a surcharge, shifting processing costs to clients.

Each plan offers different benefits, and FlexPoint helps Indiana MSPs determine the right fit based on transaction volume, service pricing, and client preferences.

a) Interchange+ Plan

FlexPoint’s Interchange+ model allows processing fees to be built into pricing for Indiana MSPs that prefer to avoid visible surcharges. This strategy ensures simple, predictable invoices while providing full transparency into actual costs.

Interchange fees vary based on card type, transaction method, and issuing bank.

For example:

• A Visa debit card transaction might have an interchange fee of 0.85% + $0.10.
• A high-reward American Express card could carry fees as high as 3.35% + $0.15 per transaction.
• Online transactions tend to have higher processing fees due to increased fraud risk.

Example Scenario

An Indiana MSP processes $70,000 in monthly credit card transactions.

• With an average interchange rate of 2.9%, the MSP pays $2,030 per month ($24,360 annually).
• By using Interchange+, the MSP adjusts service pricing accordingly to cover processing costs without applying a separate surcharge.

b) Customer Surcharge Plan

For MSPs that want to eliminate internal credit card fees, FlexPoint’s Customer Surcharge Plan allows processing fees to be shifted to clients. Instead of absorbing costs, the MSP adds a fixed percentage surcharge to credit card transactions.

Example Scenario

An MSP in Indianapolis handles $95,000 in monthly credit card transactions.

• A 3.2% processing fee results in $3,040 in fees per month ($36,480 annually).
• The MSP recovers this cost by applying a 3.2% surcharge, freeing up funds for staffing, technology upgrades, or business growth.

For MSPs that process large payments, even small percentage fees add up, making this model especially beneficial.

Some MSPs prefer a balanced approach, covering part of the fees while passing on a reduced surcharge to clients.

For example, an Indiana MSP implements a 1.6% surcharge, covering the remaining fees internally.

If they process $85,000 in credit card transactions monthly:

• At 3.2% processing fees, they incur $2,720 in costs.
• With a 1.6% surcharge, clients cover $1,360, and the MSP absorbs $1,360.
• Over a year, this saves the MSP $16,320 while keeping surcharge rates client-friendly.

FlexPoint supports flexible surcharge models, ensuring Indiana MSPs can recover processing costs without straining client relationships.

How FlexPoint Enhances Surcharging Compliance and Transparency

FlexPoint simplifies surcharging for Indiana MSPs, ensuring compliance with state laws, federal regulations, and card network policies. 

MSPs using FlexPoint confidently apply surcharges while adhering to the federal 4% cap and card brand rules, such as Visa’s 3% limit.

An invoice for an Indiana MSP that uses surcharges might look like this:

Indiana MSP Client INVOICE

Company Name: [Your MSP]
Invoice #: 985421
Invoice Date: June 10, 2025
Due Date: July 10, 2025

Bill To:
[Client Company Name] [Client Address]
[Client Contact Name][Client Email]

Services Provided:

Invoice Summary:
Subtotal: $11,500.00
Credit Card Surcharge (3%): $345.00
Total Due: $11,845.00

Payment Terms: Payment is due within 30 days of the invoice date. The surcharge complies with federal regulations (capped at 4%), Indiana State laws, and card brand requirements. Surcharges are not applied to debit or prepaid card transactions, as required by law.

FlexPoint’s Integration with MSP Tools for Seamless Billing

Managing credit card surcharges requires automation and accuracy. 

FlexPoint integrates with leading MSP accounting and payment platforms to streamline invoicing, billing, and reconciliation.

Indiana MSPs can connect FlexPoint with the following:

• QuickBooks Desktop
• QuickBooks Online
• Xero
• ConnectWise
• SuperOps
• Autotask
• HaloPSA

These integrations eliminate manual data entry, reduce administrative effort, and maintain accurate financial records.

For example, linking FlexPoint with QuickBooks Online automatically records surcharge details. This prevents discrepancies and simplifies financial reporting.

Client experience matters, including when introducing surcharges. FlexPoint offers branded client payment portals​ for your clients to view invoices and make payments. 

These portals can be branded with your company’s logo and colors, providing a seamless experience. 

Within the portal, surcharges are clearly shown, and clients can even choose their paymen

Offering Flexibility in Surcharging

With FlexPoint, Indiana MSPs gain the flexibility to structure surcharges in a way that supports both profitability and client retention. 

Instead of applying a flat surcharge across all payments, MSPs customize their policies based on factors like client loyalty, contract size, or payment frequency. 

For example, a provider serving large corporate accounts might exclude surcharges for enterprise contracts but apply them to smaller, recurring payments. This allows MSPs to manage processing fees effectively while maintaining strong client relationships.

Conclusion: Streamlining Payments with Effective Surcharging Strategies

A successful surcharge strategy requires well-defined policies, proactive client communication, and automation tools guaranteeing transparency and regulatory compliance. 

When implemented correctly, surcharging enables Indiana MSPs to recover processing costs while ensuring clients have a predictable payment experience. 

FlexPoint’s automated solutions simplify surcharge management, helping Indiana MSPs stay compliant while improving their bottom line.

Boost your MSP’s efficiency and compliance with FlexPoint’s automated surcharging solutions. 

Ensure that your surcharges are applied correctly, reduce payment processing costs, and streamline operations. 

Schedule a demo today and discover how FlexPoint can transform your MSP’s payment processes and maximize profitability.

Additional FAQs: Credit Card Surcharging in Indiana for MSPs

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