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Informist, Wednesday, Sept. 16, 2026

 

NEW DELHI – The petroleum dealers' body has urged the government to exempt retail outlets from the merchant discount rate on transactions through Unified Payments Interface. The All India Petroleum Dealers Association sought from the government to exempt the dealers from any fixed or percentage-based charges on payments made by the consumer using UPI transactions exceeding INR 2,000, according to a letter written to the finance minister.

 

Earlier this week, the government announced the imposition of a merchant discount rate of 0.4% on merchant payments of over INR 2,000 using UPI starting Oct. 15. While the person-to-person transactions will remain completely free, the RBI iterated.

 

The petroleum dealers association argued that petrol and diesel are essential commodities and involve higher transaction value. Payments routinely exceed INR 2,000 at retail outlets, making UPI a widely used digital payment mode by consumers, the letter said. 

 

The association said the fuel dealer's margins are determined by the oil marketing companies under the guidance of the oil ministry, which is fixed on a per-litre basis instead of a fraction of the transaction value. This leaves no room for the dealer to increase its earnings and an extra cost would drag down the retailer's earnings, the letter said. 

 

"The issue is because we cannot decide our rates. The rates are decided by the government, our commission is fixed, we are not getting anything extra, so that way we have no mechanism to recover that money," Ajay Bansal, president of All India Petroleum Dealers Association told Informist.

 

The impact of an INR 5 charge on transactions above INR 2,000 will be substantial on a cumulative basis because petrol pumps process many transactions daily, the letter said. The association also said that a percentage-based merchant discount rate of 0.4% would be disproportionate to the economics of petroleum retailing. 

 

The charges on transactions may also compel dealers to create an undesirable situation for consumers where they would restrict the digital payment to a particular threshold to protect their margins, which would alter the government's aim of promoting digital transactions, the association said.  End

 

Reported by Pratyush Kumar

Edited by Deepshikha Bhardwaj

 

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