Petrol Dealers Seek UPI MDR Exemption Above ₹2,000
Petrol Dealers Seek UPI MDR Exemption Above ₹2,000
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The Federation of All India Petroleum Traders warned that fuel retailers could stop accepting UPI payments of ₹2,000 or more if the charges remain in place. Its spokesperson, Monty Sehgal, said dealers have “wafer-thin margins” and that a nominal margin increase in 2024 was insufficient to cover fixed establishment costs.
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The Empower Petroleum Dealers Foundation estimated that transactions above ₹2,000 account for about 20% of retail-outlet transactions. Based on NPCI data cited in the report, the resulting MDR burden could total roughly ₹2.4 crore per day nationwide, or around ₹230–250 per outlet per day on average.
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The burden would vary significantly by location: the report estimated daily MDR costs of roughly ₹500–1,400 for highway outlets and ₹300–600 for semi-urban outlets, compared with an average of ₹230–250 per retail outlet.
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Dealers proposed that oil marketing companies absorb the UPI charges, as they had previously absorbed MDR on credit- and debit-card fuel transactions, or that dealer margins be increased enough to cover the cost.
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The dealers’ argument is based partly on a precedent involving card payments: they said the government had previously recognised the distinct nature of fuel transactions and granted card-payment exemptions, and that the same principle should apply to UPI.
Petrol pump dealers across India are demanding a full exemption from Merchant Discount Rate charges on UPI payments above ₹2,000, warning that even small fees will crush their already thin profit margins Moneycontrol. The All India Petroleum Dealers Association says dealer earnings come from fixed per-litre margins that have barely budged since 2017, while operating costs have soared. A ₹5 flat fee or a 0.4% charge on large UPI transactions would significantly eat into profits, they argue The Hindu.
Without relief, some retailers may simply stop accepting UPI payments above ₹2,000 India Today. The dealers are comparing their situation to earlier exemptions granted for credit and debit card payments, arguing fuel transactions deserve the same treatment regardless of payment method Livemint.
Wafer-Thin Margins Under Pressure From Rising Costs
Dealers operate on margins set per litre, not as a percentage of sales Moneycontrol. These margins have remained largely flat since 2017, even as rent, electricity, and staff salaries have climbed. A small 2024 margin increase proved insufficient to offset fixed establishment costs, according to Monty Sehgal of the Federation of All India Petroleum Traders. The new UPI charge creates an unexpected burden at a time when dealer profitability is already under stress.
MDR Could Cost ₹2.4 Crore Daily Across All Pumps
The Empower Petroleum Dealers Foundation estimates that transactions above ₹2,000 represent roughly 20% of retail-outlet sales Livemint. If the ₹5 MDR or percentage charge applies to these transactions, the nationwide daily burden could total around ₹2.4 crore, or about ₹230–₹250 per outlet daily on average. However, the burden varies sharply by location. Highway outlets could face daily costs of ₹500–₹1,400, while semi-urban outlets might bear ₹300–₹600 daily.
Dealers Warn They May Reject Large UPI Payments
The Federation of All India Petroleum Traders cautioned that retailers could refuse UPI payments of ₹2,000 or higher if charges remain Moneycontrol. Such a move would frustrate consumers and hurt digital payment adoption in a critical sector. The dealers say oil marketing companies should absorb the charges as they did with card transactions, or the government should raise dealer margins to cover costs India Today.
Precedent: Government Exempted Card Payments Before
Dealers point to earlier government decisions to exempt fuel transactions from MDR on credit and debit card payments The Hindu. They argue the same principle should apply to UPI since the payment method does not change the nature of the underlying sale. This precedent, they say, shows the government already recognizes fuel as a sector needing payment-method relief Livemint.
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