- By Priyanka Koul
- Wed, 16 Sep 2026 06:07 PM (IST)
- Source:JND
- Petrol pump dealers threaten to halt UPI payments over Rs 2,000.
- Government introduced 0.4% fee on UPI transactions above Rs 2,000.
- NPCI clarifies Rs 5 MDR for fuel payments above Rs 2,000.
A day after the central government introduced a 0.4 per cent fee on UPI transactions above Rs 2,000, petrol pump dealers across India have threatened to stop accepting UPI payments of Rs 2,000 and above and switch to cash if they are required to pay a flat Merchant Discount Rate (MDR) of Rs 5 per transaction.
Dealers said the additional charge would further squeeze their already wafer-thin margins. Shopkeepers, too, said they may encourage customers to make cash payments to avoid additional costs associated with digital transactions.
The development comes after the government on Tuesday introduced the charge as part of a framework for large digital merchant payments, effectively ending the zero-MDR regime that has been in place since January 2020. The charge has been capped at Rs 300 for transactions of Rs 75,000 and above.
What are petrol pump dealers saying?
Petrol pump dealers from Delhi-NCR, Punjab, Uttar Pradesh, Mumbai, Karnataka and Rajasthan said that MDR in any form would add to the financial burden on their already thin margins of around Rs 2.40-3.40 per litre. These margins are also determined by the government through its oil marketing companies (OMCs).
Most individual dealers requested anonymity, citing concerns over possible reprisals, HT reported.
Federation of All India Petroleum Traders (FAIPT) spokesperson Monty Sehgal said, “We may have to stop accepting UPI payments of Rs 2,000 and above if exemption is not allowed to fuel retailers."
According to data, there were 103,023 petrol pumps across India as of April 2026. More than 90 per cent of these outlets are operated by three state-run OMCs - Indian Oil Corporation (IOC), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL). The remaining outlets are owned by private oil companies such as Nayara, Jio-BP and Shell.
The Akhila Karnataka Federation of Petroleum Traders (AKFPT) has also written to the Centre seeking an exemption. The federation argued that petroleum retail outlets cannot be compared with ordinary retail businesses.
Will UPI charges be levied on petrol purchases above Rs 2,000?
No. Customers will continue to make UPI payments free of charge, including for petrol purchases. The applicable MDR is a merchant-side charge and is not directly levied on customers.
The National Payments Corporation of India (NPCI) on Tuesday explained how the MDR would apply to fuel purchases made at petrol pumps through UPI.
“Fuel purchases made at petrol stations via UPI qualify for the flat concessional rate of Rs 5 for payments over Rs 2,000. The flat Rs 5 fee protects petrol pump operators from high processing fees on tank refills. For all fuel payments under Rs 2,000, the MDR remains at 0 per cent, ensuring everyday commuter refuelling is completely charge-free, while fuel station operators are not subject to any MDR on such transactions,” it said.
Meanwhile, the All India Petroleum Dealers Association (AIPDA) has sought a complete exemption for petrol pumps from MDR on UPI transactions above Rs 2,000.
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“Petrol and diesel are essential commodities, and fuel purchases are inherently high-value transactions. Consequently, payments exceeding Rs 2,000 are routine at petrol pumps, making UPI one of the most widely used digital payment modes by customers,” it said.