Petrol pump dealers threaten to stop UPI payments above Rs 2000 over Rs 5 MDR

Petrol pump dealers across several states have threatened to stop accepting UPI payments of Rs 2,000 and above if they are required to bear a flat Rs 5 merchant discount rate (MDR) on such transactions.

Dealers in Delhi-NCR, Punjab, Uttar Pradesh, Maharashtra, Karnataka and Rajasthan have raised concerns that the proposed charge would further squeeze their margins, which they estimate at around Rs 2.40 to Rs 3.40 per litre.

Monty Sehgal, spokesperson for the Federation of All India Petroleum Traders (FAIPT), said fuel retailers may be forced to restrict UPI payments above the Rs 2,000 threshold if an exemption is not granted.

The issue follows a clarification from the National Payments Corporation of India (NPCI) that UPI transactions for fuel purchases above Rs 2,000 will attract a flat Rs 5 MDR, while transactions below the threshold will continue to carry zero MDR.

The Akhila Karnataka Federation of Petroleum Traders (AKFPT) has sought an exemption for fuel retailers, arguing that dealers cannot increase petrol and diesel prices to recover digital payment charges as retail prices are fixed by oil marketing companies.

Uttar Pradesh-based dealer Hemant Sirohi, citing official UPI transaction data, said petrol pumps collectively process around 23.9 million UPI transactions worth Rs 1,573 crore. About 20 per cent of these transactions are estimated to exceed Rs 2,000.

Sirohi estimated that the proposed MDR could impose an additional burden of around Rs 230 to Rs 250 per day on an individual petrol pump.

The All India Petroleum Dealers Association (AIPDA) has also urged the government to completely waive MDR for fuel stations. The association has argued that petrol and diesel are essential commodities and transactions above Rs 2,000 are common at fuel stations.

India had 1,03,023 petrol pumps as of April 2026, with more than 90 per cent of them operated by Indian Oil, Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL).

The proposed MDR has also raised concerns over its potential impact on consumers and digital payment adoption. BimaPay CEO Hanut Mehta said passing digital payment costs on to consumers could affect confidence in digital payments, particularly among price-sensitive users.