Petrol Pump Dealers Threaten Cash-Only Payments Above Rs 2,000 Over UPI MDR
New Delhi, KNT: Petrol pump dealers across several states, including Jammu and Kashmir have warned that they may stop accepting UPI payments above Rs 2,000 and switch to cash transactions if the new Merchant Discount Rate (MDR) applicable to fuel purchases is not withdrawn or the sector is exempted.
The warning follows the National Payments Corporation of India’s revised UPI framework, under which fuel purchases above Rs 2,000 will attract a flat MDR of Rs 5 from Oct 15. Transactions below Rs 2,000 at fuel stations will continue to carry zero MDR under the notified framework.
The Federation of All India Petroleum Traders (FAIPT) has said dealers may discontinue UPI payments above the threshold if the exemption sought from the government is not granted. Dealers in Delhi-NCR, Punjab, Uttar Pradesh, Mumbai, Karnataka and Rajasthan have raised objections to the new charge, according to reports.
Petroleum dealers have argued that the additional charge would put pressure on their margins. Reports citing dealers put their commission or margin at around Rs 2.40 to Rs 3.40 per litre, with dealers maintaining that the Rs 5 MDR on a transaction could represent a significant additional cost, particularly because fuel prices are not freely determined by individual petrol pump operators.
The All India Petroleum Dealers Association has also sought complete exemption from MDR for petrol pumps, arguing that fuel purchases above Rs 2,000 are routine and that digital payments have become a widely used payment method at fuel stations.
The proposed shift to cash would affect customers making larger fuel purchases, particularly motorists and commercial vehicle operators who routinely use UPI for refuelling. Petrol pump operators in Mumbai have separately warned that UPI facilities could be discontinued from Oct 15 unless fuel retailers are exempted from the revised MDR.
The new framework does not, however, impose the Rs 5 charge directly on customers. The MDR is a merchant-side charge, while the government has said the cost should not be passed on to consumers. The Finance Ministry is also preparing a monitoring mechanism to track whether merchants attempt to transfer the charge to customers.
The development comes after years of expansion of digital payments at fuel stations. Public-sector oil companies and private fuel retailers have introduced UPI, QR-code and other digital payment facilities across their outlets. [KNT]
