Ahmedabad: The Federation of Gujarat Petroleum Dealers Associations has urged National Payments Corporation of India (NPCI) to exempt petrol and diesel outlets from the proposed 0.4% Merchant Discount Rate (MDR) on UPI transactions above Rs 2,000.
The federation said, “The charge would add to the operating burden of fuel stations, where digital transactions above Rs 2,000 are common. For a Rs 5,000 fuel purchase, a 0.4% MDR would amount to Rs 20. The estimated dealer margin is Rs 3.9 per litre of petrol and Rs 2.5 per litre of diesel, according to FGPDA sources. The representation comes soon after the Centre and NPCI announced a new MDR framework for UPI, under which merchant transactions above Rs 2,000 will generally attract a 0.4% charge from Oct 15. However, fuel payments are among a set of essential and thin-margin categories that will attract a flat Rs 5 MDR per transaction instead.
In a representation to NPCI, FGPDA president Mehul Patel said fuel dealers operate on fixed margins prescribed by oil marketing companies and cannot independently raise prices to absorb additional transaction costs. “Petroleum dealers also cannot recover the charge from customers through a separate payment surcharge, as fuel prices are displayed at retail outlets and dealer margins are regulated,” said Dhimant Ghelani, secretary, FGPDA. The Centre said the differentiated rate was intended to provide cost certainty to businesses operating on narrow margins. FGPDA said fuel dealers support digital payments and UPI but argued that the cost of facilitating such transactions should account for the economics of petroleum retailing.
“We hope that a complete exemption is given for fuel stations or a mechanism under which the MDR is absorbed or reimbursed through an industry-level arrangement. It has also sought a clarification for banks, payment service providers and acquiring entities on the applicability of MDR to fuel station transactions.