Petrol dealers press Centre for full UPI waiver

Petrol pump operators have petitioned the Indian government to grant fuel outlets a complete exemption from merchant discount rate (MDR) charges on UPI payments, according to the All India Petroleum Dealers Association (AIPDA). The association, led by president Ajay Bansal, made the appeal in a letter to Finance Minister Nirmala Sitharaman, requesting relief prior to the revised UPI merchant payment framework's implementation on October 15.

The new rules stipulate an MDR of 0.4 per cent on person-to-merchant UPI transactions exceeding ₹2,000, with a cap of ₹300 for transactions over ₹75,000. Fuel, railways, telecommunications, insurance, and agricultural inputs are classified as essential-sector businesses with a flat ₹5 MDR on payments above ₹2,000. The Finance Ministry clarified that person-to-person UPI transfers remain free regardless of value, as do merchant payments up to ₹2,000 and qualifying small-merchant transactions.

AIPDA argues that even a modest ₹5 charge would significantly impact dealer margins, as oil marketing companies determine earnings based on a per-litre basis, leaving outlets unable to offset payment-processing costs with higher margins on larger transactions. The association contends that applying the general 0.4 per cent rate would be particularly burdensome for the sector.

AIPDA requests an absolute exemption from MDR and associated transaction fees for all UPI payments at retail fuel outlets, or alternatively, a specific exemption from both percentage-based and fixed per-transaction charges if the ₹2,000 threshold is maintained. The association warns that imposing the fee may prompt some dealers to discourage or limit UPI payments above the threshold to protect margins, potentially undermining the government's aim to expand digital payments and enhance transaction transparency.