Petrol pump dealers across India have threatened to stop accepting unified payments interface (UPI) payments of ₹ 2,000 and above and switch to cash if they are required to pay a flat merchant discount rate (MDR) of ₹ 5 per transaction, saying the charge would further squeeze their wafer-thin margins.
Most of the individual dealers requested anonymity, fearing reprisals. In a letter to the Union government and state-run OMCs, the Akhila Karnataka Federation of Petroleum Traders (AKFPT) asked for an exemption on the basis that petroleum retail outlets cannot be compared with ordinary retail businesses. “The selling prices of petrol and diesel are determined by the respective Oil Marketing Companies, and petroleum dealers operate on a prescribed dealer commission and margin structure. A copy of the letter was reviewed by HT. Two dealers – one based in Mumbai and another in New Delhi – asked for the complete withdrawal of MDR charges for petrol pumps. This had been faced by dealers in the past. Private service providers often blocked payments during weekends to benefit from accrued interest, they added. “Petrol and diesel are essential commodities, and fuel purchases are inherently high-value transactions.
Dealers from Delhi National Capital Region (NCR), Punjab, Uttar Pradesh, Mumbai, Karnataka and Rajasthan told HT that MDR in any form is an additional burden on their wafer-thin margins of around ₹ 2.40-3.40 per litre, which are also determined by the government through its oil marketing companies (OMCs). Uttar Pradesh-based dealer Hemant Sirohi, who is a member of the Empowering Petroleum Dealers Foundation (EPDF), said: “A quick calculation of available official UPT transaction data shows that country-wide petrol pumps undertake 23.9 million such payments worth ₹ 1,573 crore. About 20% of such transactions are above ₹ 2,000, having a financial implication of ₹ 230-250 per day on a petrol pump. “Fuel purchases made at petrol stations via UPI qualify for the flat concessional rate of ₹ 5 for payments over ₹ 2,000. The flat ₹ 5 fee protects petrol pump operators from high processing fees on tank refills. For all fuel payments under ₹ 2,000, the MDR remains at 0%, ensuring everyday commuter refuelling is completely charge-free, while fuel station operators are not subject to any MDR on such transactions,” it said. In a letter dated September 16, the All India Petroleum Dealers Association (AIPDA) asked the government for a complete exemption for petrol pumps from MDR on UPI transactions above ₹ 2,000. Consequently, payments exceeding ₹ 2,000 are routine at petrol pumps, making UPI one of the most widely used digital payment modes by customers,” it said.
Because the cost of accepting a particular digital-payment mode increases,” it said, a dealer does not have the freedom to increase the Retail Selling Price of petrol or diesel merely. Because of mounting burdens on them, this will hurt dealers. Because oil companies often collaborate with payment solution providers and promote cartelisation, they said, even shifting the responsibility to OMCs is not a solution.
“We may have to stop accepting UPI payments of ₹ 2,000 and above if exemption is not allowed to fuel retailers,” Federation of All India Petroleum Traders (FAIPT) spokesperson Monty Sehgal said. Frequently asked questions (FAQs) released by the National Payments Corporation of India (NPCI) on Tuesday explained how MDR would work for fuel purchases at petrol pumps via UPI.
