Mumbai Fuel Pumps Threaten To Drop UPI Over MDR Fees From Oct. 15

Mumbai: Vehicle owners in Mumbai may face problems in buying fuel as petrol pumps across the city have threatened to stop accepting UPI payments from October 15 if the Centre does not exempt fuel retailers from the revised merchant discount rate (MDR) above Rs 2,000.

The Petrol Dealers Association of Mumbai (PDAM) has written to the Reserve Bank of India and the Finance Ministry, seeking a complete waiver of the charges for fuel retailers. The association warned that dealers could withdraw UPI payment facilities if the MDR is not rolled back.

The Centre has introduced a 0.4 percent MDR on person-to-merchant UPI transactions above Rs 2,000, with exemptions for certain small and micro merchants. However, petrol pumps have raised concerns over the additional cost saying they frequently receive transactions above the threshold.

Petrol pump operators argue that since fuel prices are regulated, they cannot pass the additional transaction costs on to customers and this charge will impact their already limited profit margins.

The PDAM stated that petrol pumps had made significant investments to establish digital payment infrastructure based on the earlier zero-MDR framework under the ‘Digital India’ campaign. Dealers pointed out that their commission has remained unchanged for years, even as operational and compliance costs have risen. Without some relief regarding the proposed MDR, petrol pump operators would face a substantial financial burden.

The association said more than 60 per cent of fuel sales at its outlets are now conducted through digital payments. “Our retail outlets have achieved over 60 percent digitalisation of all fuel and diesel sale transactions through intensive infrastructural deployment under the explicit assurance of a zero-MDR environment. However, the revised implementation creates an existential crisis for retailers due to multiple critical constraints,” said Chetan Modi, PDAM president.

According to observers, the threat to discontinue UPI facilities at petrol pumps has raised concerns about the inconvenience this would cause to thousands of motorists who have largely shifted to digital payments. Many vehicle owners often step out without carrying sufficient loose cash; halting UPI payments at petrol pumps would cause them significant inconvenience, they said.