Petrol pump dealers across Mumbai, Thane, Raigad and Palghar have threatened to stop accepting UPI payments from October 15 if the proposed Merchant Discount Rate (MDR) charges are not withdrawn for fuel retailers.
The Petrol Dealers Association across these regions has approached the Reserve Bank of India (RBI), seeking a complete exemption from the new UPI charges. The dealers have warned that the additional transaction cost could put further pressure on already-tight operating margins.
Why Are Petrol Dealers Opposing The Charges?
The association said fuel retailers have been dealing with rising costs while their commission margins on petrol and diesel have remained unchanged since 2017.
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According to the dealers, expenses related to real estate, labour and regulatory compliance have increased over the years. Unlike several other businesses, petrol pumps also cannot simply add payment-related costs to the price paid by customers because fuel prices are regulated.
The dealers have therefore argued that any MDR on UPI payments would have to be absorbed by the retailers themselves. The scale of the issue is significant, according to the association.
A typical petrol pump handles around 500 transactions a day. About 80 per cent of these payments are made digitally, with UPI alone accounting for around 60 per cent of all transactions.
Cash makes up roughly 20 per cent, while credit cards and other digital payment methods account for the remaining digital transactions. The association said the impact is particularly relevant to fuel purchases above Rs 2,000.
In Mumbai, around 40 per cent of UPI transactions at petrol pumps are above Rs 2,000. On highways, the share is estimated to be even higher, at around 60 per cent.
Dealers Say They Adopted UPI When MDR Was Zero
The association said petrol dealers invested in digital payment infrastructure when UPI transactions operated under a zero-MDR framework.
According to the dealers, introducing charges now would create an additional business expense after retailers had already adopted UPI as a regular payment option for customers.
The association has consequently asked the RBI to exempt fuel retailers completely from the proposed MDR charges.
How Many Petrol Pumps Are Represented?
The association said its membership covers a large network of fuel retailers across the Mumbai Metropolitan Region and adjoining areas. Mumbai has around 200 petrol pumps, with about 150 public-sector dealers represented by the association. Thane and Palghar together have around 550 petrol pumps, all of which, according to the association's letter, fall under its membership.
The dealers represented include outlets operated by Indian Oil Corporation Ltd (IOCL), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL), among other oil marketing companies.
With the October 15 deadline approaching, the association has urged the RBI to intervene and resolve the issue before UPI payment facilities at petrol pumps are affected.