Petrol pump UPI payments above Rs 2,000 to stop from October 16 in Madhya Pradesh: Dealers cite 0.4% MDR charge; debit and credit cards to remain available

Petrol pump dealers in Madhya Pradesh have announced that they will stop accepting UPI payments above Rs 2,000 from October 16, citing the proposed 0.4 per cent Merchant Discount Rate (MDR) on high-value merchant transactions.

The Madhya Pradesh Petroleum Dealers Association said its members would not be able to absorb the additional cost because fuel retailers operate on narrow profit margins. Association president Ajay Singh said the decision was taken after the proposed MDR framework was announced.

As per ANI, Singh said the association had written to its State-Level Coordinator (SLC) regarding the proposed charge.


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"We have written a letter to our State-Level Coordinator (SLC) regarding the government's decision that an MDR charge of 0.4 per cent will be levied on UPI transactions above Rs 2,000 from October 16. The situation is that, on average, around 100 customers at each petrol pump make transactions above Rs 2,000. This will result in a loss of around Rs 590 per day, which comes to approximately Rs 17,700 per month," Singh said.

UPI payments above Rs 2,000 at petrol pumps

According to the association, petrol pump dealers have a profit margin of around 0.5 per cent, making it difficult for them to absorb an additional payment-processing charge.

Singh said dealers would continue to accept debit and credit card payments without any such limit, but UPI payments above Rs 2,000 would not be accepted from October 16.

"We cannot recover this because our profit margin is very small. We are able to make only around 0.5 per cent profit, and we are not in a position to bear any additional expense. If customers use credit or debit cards from October 16, we have no problem and they can use them without any limit. But we will not accept UPI payments above Rs 2,000," he said.

Petrol pump dealers seek UPI MDR exemption

The association has also urged the government to extend the MDR exemption available to petrol pumps for credit and debit card transactions to UPI payments.

Singh said the association had already sought the same treatment for UPI, citing the specific circumstances in which fuel retailers had previously received an exemption for card payments.

"Now it is up to the government. We have already been given an exemption from MDR charges on credit and debit card transactions. So, we request the government to extend the same exemption to UPI as well, considering the special circumstances under which petrol pumps were granted an exemption on credit and debit card transactions," the association president said.

How will the UPI rule affect customers?

For customers, the proposed restriction means that those making payments above Rs 2,000 at participating petrol pumps in Madhya Pradesh may need to use another payment method.

Singh said customers would still have access to debit and credit card facilities at petrol pumps.

"It is for the public to decide what the government is doing with them. We have no choice, so we will not accept UPI payments above Rs 2,000. Nonetheless, for the convenience of customers, we have kept both debit and credit card facilities available," he added.

What is the new UPI MDR framework?

The proposed MDR framework applies to Person-to-Merchant (P2M) UPI transactions above Rs 2,000. Under the framework described by the association, the MDR is set at 0.4 per cent and capped at Rs 300 per transaction.

UPI itself is an instant payment system operated by the National Payments Corporation of India (NPCI), allowing users to transfer money between bank accounts and make merchant payments.

The proposed MDR is a charge within the payment ecosystem rather than a direct fee imposed on consumers for using UPI. The reported framework also provides for the MDR to be distributed among participants in the payments ecosystem.

Will customers have to pay for UPI?

The MDR charge does not mean that consumers will be charged directly for making UPI payments. The reported framework concerns merchant transactions and the processing cost associated with them.

The Madhya Pradesh Petroleum Dealers Association's concern is that fuel retailers would have to bear the additional cost unless an exemption is extended to UPI payments.

The association's proposed move therefore focuses specifically on high-value UPI payments at petrol pumps, while other payment options, including debit and credit cards, are expected to remain available.


Inputs from ANI