Oil sellers oppose MDR on fuel, ask for exemption

A large portion of fuel sales are high-value transactions that routinely exceed ₹2,000. Any additional fee would erode traders’ margins, according to the United Petroleum Dealers Association. | Photo credit: File Photo

Oil marketers have expressed concern over the rebate rate framework for traders, particularly the ₹5 MDR flat rate on fuel transactions above ₹2,000 that they have to pay from October 15.

A large portion of fuel sales are high-value transactions that routinely exceed ₹2,000. Any additional charge would erode dealers’ margins, United Petroleum Dealers Association general secretary M. Amarender Reddy said on Wednesday.

Appealing to the government to exempt all petroleum retail outlets from any MDR, regardless of the transaction value, he said “protection of low regulated dealer margins is essential both for the viability of the retail network and continued high acceptance of UPI at petrol stations”.

Even a flat fee of ₹5 per transaction, above ₹2,000, will have a serious cumulative impact on sellers as their margins are fixed per litre. Since the prices of petrol and diesel at the pumps are determined and controlled under state-owned oil marketing companies (OMCs) and government policy, dealers have little freedom to revise the selling price or adjust margins independently to cover any additional costs arising from a particular payment scheme, he said.

K. Suresh Kumar, general secretary of the Consortium of Indian Petroleum Dealers, estimated the additional expenditure for high-volume urban and highway dealers on account of the MDR levy at ₹ 40,000-50,000 per month. “We may have to stop accepting UPI payments if the government goes ahead with the plan,” he said, adding that the OMCs were in talks with the authorities.

In a letter to the Union Finance Minister, Petroleum Minister, RBI Governor, National Payments Corporation of India and OMC, Mr. Reddy said fuel retailers have fully supported digital payments at retail outlets as part of the National Digital Payments Initiatives.

“Penalizing them for adopting the infrastructure that is being supported is unfair and contrary to the objective of a cashless economy,” he said, demanding recognition of fuel outlets as a special category of traders in view of regulated prices of petroleum products and fixed dealers’ commission.

The United Petroleum Dealers Association also opposed shifting the MDR burden to OMCs, citing past experience where arrangements involving oil companies and their fintech/payment partners often resulted in delayed settlement of sales proceeds and other issues. “Such practices have already short-changed retailers,” he said.

Published – 16 Sep 2026 20:33 IST