SB 412 creates a new chapter in Indiana law regulating payment card network interchange fees for electronic payment transactions. The bill applies to transactions initiated after June 30, 2025, when the transaction includes certain Indiana taxes collected by a merchant or a gratuity paid by a customer. It defines key terms such as interchange fee, payment card network, merchant, issuer, gratuity, and covered tax, and it covers taxes including sales and use tax, auto rental excise taxes, vehicle sharing excise tax, and innkeeper’s and food and beverage taxes.
The core requirement is that payment card networks must exclude covered taxes and gratuities from the amount used to calculate interchange fees. Networks must either deduct those amounts at settlement or rebate the portion of the fee attributable to them. If a merchant cannot transmit tax or gratuity data at the time of the transaction, the network must accept proof later and promptly credit the merchant’s settlement account. The bill also prohibits networks from evading the law by shifting fees onto the non-tax, non-gratuity portion of the transaction.
Impact
The bill would amend Indiana Code by adding IC 24-5-28, creating a new state regulatory framework for card-network fee calculations. It would affect payment card networks, issuers, merchants, and merchants’ settlement processing by limiting interchange fees on amounts that represent taxes or tips, and it authorizes civil penalties of up to $1,000 per violation plus refunds of excess fees. It also makes fee-circumvention conduct a deceptive act enforceable only by the attorney general under Indiana’s deceptive consumer sales law. The act is declared an emergency and would take effect upon passage, though the substantive transaction rules apply only to transactions initiated after June 30, 2025.
Sentiment
No committee transcript or vote record was provided, so there is no direct evidence of debate, support, or opposition in the available materials. Based on the bill text, the measure appears designed to benefit merchants by preventing interchange fees from being charged on tax and gratuity amounts, while imposing compliance obligations on payment card networks. The overall framing suggests a consumer- and merchant-protection approach rather than a broad tax change.
Contention
The likely points of contention are the cost and operational burden placed on payment card networks versus the financial relief provided to merchants. Networks may object to the requirement to modify settlement systems, accept proof of taxes and gratuities when data cannot be captured at the point of sale, and face penalties and attorney general enforcement for circumvention. Merchants, by contrast, would likely support the bill because it reduces fees charged on amounts that are not part of the merchant’s revenue. Another possible issue is how easily merchants can capture and transmit tax and gratuity data, since the bill’s main rule depends on that capability.
Creates the interchange fee restriction act restricting interchange fees on sales and use tax or excise tax when payment is made with a credit or debit card.