LPG agencies likely to face the heat of MDR, plan to approach government

Cooking gas distributors are considering the potential consequences of the flat ₹5 Merchant Discount Rate (MDR) that the National Payments Corporation of India (NPCI) has planned for transactions exceeding ₹2,000, starting October 15. LPG cylinder sales, which typically exceed ₹2,000 for 19-kg refills, fall within this category.

However, the uncertainty lies in whether domestic refills, usually priced below ₹1,000 for 14.2 kg cylinders, will also be subject to the MDR. Distributors' delivery personnel currently collect payments from customers via UPI and later transfer the funds to the distributor. From October 15, these individual remittances may be impacted by the MDR.

Jagan Mohan Reddy, president of the Telangana LPG Distributors Association, explained that the distributors are assessing the potential impact and intend to seek government exemption soon. Similar to petroleum vendors, the LPG distributors are likely to complain about the charge, citing the fragile margins they operate within. NPCI announced the MDR framework, specifying a flat ₹5 charge per transaction for certain merchant categories such as railways, telecom services, insurance, and fuel.

By using a fixed fee instead of a variable rate, NPCI aims to prevent cost increases in essential services and digitally efficient utility bill collections in thin-margin sectors like fuel retail.