- Punjab, Haryana petrol pumps halt UPI payments.
- Protest against new Merchant Discount Rate (MDR).
- Dealers cite low margins, additional financial burden.
Petrol pump operators in Punjab and Haryana have decided to stop accepting UPI payments in protest against the Merchant Discount Rate (MDR). The move could inconvenience customers who rely on digital payments to purchase petrol and diesel.
Last month, the Centre announced a 0.4 per cent MDR on UPI payments above Rs 2,000 made to merchants, with the charge capped at Rs 300 for transactions of Rs 75,000 and above. This marked a shift from the zero-MDR regime that has been in place since January 2020.
However, the implementation of MDR on Person-to-Merchant (P2M) UPI transactions above Rs 2,000 will not come into effect from October 15.
What Did Punjab-Haryana Petroleum Dealers Say?
Punjab President Paramjit Singh Doaba and spokesperson Monty Sehgal said petroleum dealers were already struggling with low profit margins and the arbitrary policies of oil companies. They maintained that dealers could not absorb the additional MDR burden from their fixed margins.
Punjab has more than 4,000 petrol pumps. Ashwinder Mongia, an executive member of the Petrol Pump Dealers’ Association Punjab (PPDAP), said the charge would hurt dealers as many consumers, particularly truck drivers, use UPI to make payments.
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The All Haryana Petroleum Dealers Association (AHPDA) has also written to Finance Minister Nirmala Sitharaman and Petroleum Minister Hardeep Singh Puri, seeking their immediate intervention.
The letter reads, "This representation is regarding the Rs 5 MDR on UPI transactions above Rs 2,000 in the fuel sector. Petroleum dealers are already operating on very limited margins, and the additional MDR burden will particularly affect low-sales-volume petrol pumps in Haryana."
The association has demanded a complete exemption from the Rs 5 MDR, the continuation of the Zero-MDR UPI facility for the fuel sector, no additional payment burden on petroleum dealers, and special consideration for low-volume outlets.
What Is MDR?
Merchant Discount Rate (MDR) is the fee merchants pay to banks or payment service providers for processing digital payments. Under the recently announced provision, a 0.4 per cent fee was proposed on UPI transactions exceeding Rs 2,000.
The charge applies to merchants, not customers making UPI payments. The proposed change could boost revenue for payment gateways and fintech companies such as Paytm and MobiKwik. When the decision was announced last month, shares of these companies saw a significant surge.