UPI transaction charges: Petrol pump sellers seek full MDR exemption on payments above ₹2,000 | Today’s news

The All India Petroleum Dealers Association has requested the Union Finance Minister for immediate waiver of the Merchant Discount Rate (MDR) charges. UPI payments exceeding ₹2000.

In a formal letter sent on Wednesday, Association President Ajay Bansal urged government intervention over high payment processing fees.

The association pointed out that since dealers’ profits are based on fixed margins per liter rather than total transaction values, percentage-based transaction levies directly reduce their net income.

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The proposed UPI transaction charges for payments above ₹2,000 include a Merchant Discount Rate (MDR) of 0.4%, capped at a maximum charge of ₹300 for transactions of ₹75,000 and above.

Petrol pump dealers claim that high MDR charges reduce their earnings as their commissions are fixed per liter and not as a percentage of the transaction value, putting a financial burden on their operations.

The new UPI MDR framework could discourage petrol retailers from facilitating UPI payments above ₹2,000, potentially undermining the government’s aim to expand the adoption of digital payments.

Consumers should not worry about paying UPI transaction fees as the National Payments Corporation of India (NPCI) has clarified that consumers will continue to make UPI payments without fees.

The association demanded either complete exemption from all MDR and transaction charges for UPI payments or special exemptions for payments above ₹2,000 to keep the business viable.

The association highlighted their financial burden, pointing out that dealer commissions had not been updated since October 2017. Over the same period, key operating overheads – including electricity bills, staff wages and compliance costs – had risen significantly.

Although pump owners have repeatedly dealt with oil marketing companies to resolve the matter, these negotiations have yielded no results, leaving operators with increasingly thin profit margins.

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“Dealer margins are determined by the Oil Marketing Companies (OMCs) under the Ministry of Petroleum and Natural Gas and are primarily fixed on a per liter basis and not as a percentage of the transaction. value. Dealers therefore have no mechanism to increase their earnings in proportion to the value of the transaction,” the association said in the letter.

“Even a seemingly modest flat fee ₹5 for the above UPI transaction ₹2,000 would have a substantial cumulative impact. Petrol pumps process a very large number of transactions each day and multiplying even a small fee over thousands of transactions would create a significant recurring financial burden. An MDR percentage of up to 0.4% would be even more disproportionate to the economics of retail oil,” the letter added.

Fuel retailers argued that the payment channel a customer uses does not change the fundamental nature or profitability of fuel sales.

They pointed out that the government had previously recognized the unique economics of oil retail by granting special card payment exemptions – a policy framework that dealers say should logically apply to high-value UPI transactions today.

The association warned that unmitigated processing fees may force merchants to curtail or discourage UPI payments above certain limits just to protect their livelihoods. Such restrictions would directly undermine the central government’s larger mission to expand the adoption of digital payments, increase transaction transparency and improve consumer comfort.

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Key requirements submitted to the Ministry

To maintain business viability across retail outlets, the association presented two specific solutions to the center:

• Make a complete, blanket exception to all of them MDR and associated transaction fees for every UPI payment processed at retail outlets, regardless of transaction size.

Alternatively, if the industry standard threshold is maintained, provide petrol pumps with express exemptions from the percentage MDR and fixed UPI transaction charges above ₹2000.

“Digital payments have significantly increased customer convenience, transaction transparency and operational efficiency in fuel retailing. Therefore, oil retailers should not be penalized financially for facilitating and supporting such digital transactions,” the letter said.