New Delhi, September 18: Petrol pump dealers in several states, including Jammu and Kashmir, have warned that they may stop accepting UPI payments above Rs 2,000 from October 15 if the newly applicable Merchant Discount Rate (MDR) on fuel transactions is not withdrawn or the sector is exempted.
The move follows a revised UPI framework under which fuel transactions above Rs 2,000 will attract a flat MDR of Rs 5 from October 15. Transactions below Rs 2,000 at fuel stations will continue to remain exempt from MDR.
The Federation of All India Petroleum Traders has said dealers could discontinue UPI payments above the threshold if their demand for exemption is not accepted. Dealers in Delhi-NCR, Punjab, Uttar Pradesh, Mumbai, Karnataka and Rajasthan have also raised concerns over the proposed charge.
Petroleum dealers argue that the additional cost could put pressure on their margins. Reports citing dealers have placed their commission at around Rs 2.40 to Rs 3.40 per litre, making the proposed Rs 5 transaction charge a significant cost for some outlets.
The All India Petroleum Dealers Association has also sought a complete exemption from MDR for petrol pumps, stating that transactions above Rs 2,000 are common and digital payments have become widely used at fuel stations.
A shift towards cash payments could affect customers making larger fuel purchases, including motorists and commercial vehicle operators who regularly use UPI for refuelling.
The proposed Rs 5 MDR is a merchant-side charge and is not directly imposed on customers. The government has said the cost should not be passed on to consumers. The Finance Ministry is also working on a monitoring mechanism to check whether merchants transfer the charge to customers.
The development comes amid the continued expansion of UPI and other digital payment facilities across petrol stations operated by public and private fuel retailers.
