The Madhya Pradesh Petroleum Dealers Association has announced that petrol pumps across the state will stop accepting UPI payments above Rs 2,000 from October 16, citing the proposed 0.4 per cent Merchant Discount Rate (MDR) on such transactions.
The association said the decision was taken because petrol pump dealers operate on narrow profit margins and cannot absorb the additional cost. However, customers will still be able to make payments above Rs 2,000 through debit and credit cards without any limit.
Dealers Calculate Rs 17,700 Monthly Loss
Association president Ajay Singh said dealers have already written to the State-Level Coordinator (SLC) over the new MDR provision.
“We have written a letter to our State-Level Coordinator (SLC) regarding the government’s decision that an MDR charge of 0.4 per cent will be levied on UPI transactions above Rs 2,000 from October 16. The situation is that, on average, around 100 customers at each petrol pump make transactions above Rs 2,000. This will result in a loss of around Rs 590 per day, which comes to approximately Rs 17,700 per month,” ANI quoted Singh.
He said the additional charge could not be absorbed because dealers earn only around 0.5 per cent profit.
“We cannot recover this because our profit margin is very small. We are able to make only around 0.5 per cent profit, and we are not in a position to bear any additional expense. If customers use credit or debit cards from October 16, we have no problem, and they can use them without any limit. But we will not accept UPI payments above Rs 2,000,” he said.
Dealers Seek Same MDR Exemption For UPI
Singh urged the government to extend to UPI the exemption from MDR charges that petrol pumps currently receive on credit and debit card transactions.
“Now it is up to the government. We have already been given an exemption from MDR charges on credit and debit card transactions. So, we request the government to extend the same exemption to UPI as well, considering the special circumstances under which petrol pumps were granted an exemption on credit and debit card transactions,” the association president said.
Debit And Credit Cards Will Still Be Accepted
The restriction will apply only to UPI payments above Rs 2,000. Petrol pumps will continue to accept debit and credit cards for higher-value transactions.
“It is for the public to decide what the government is doing with them. We have no choice, so we will not accept UPI payments above Rs 2,000. Nonetheless, for the convenience of customers, we have kept both debit and credit card facilities available,” Singh added.
What Is The New UPI MDR Rule?
The National Payments Corporation of India (NPCI) introduced a new MDR framework on September 15. Under the framework, Person-to-Merchant (P2M) UPI transactions above Rs 2,000 will attract an MDR of 0.4 per cent, capped at Rs 300 per transaction.
Consumers will continue to use UPI without paying the MDR directly. The government has said around 96 per cent of P2M transactions will remain unaffected, while the MDR will be distributed among payment ecosystem participants, including banks and payment application providers.