UPI payments at petrol pumps in Madhya Pradesh will be restricted to transactions of up to Rs 2,000 from October 16, after fuel station dealers said they would not absorb the new merchant charges applicable to higher-value UPI payments. Customers will continue to be able to use debit and credit cards without a transaction limit.
The decision was announced by the Madhya Pradesh Petroleum Dealers Association after the National Payments Corporation of India introduced a revised merchant discount rate framework on September 15. Association president Ajay Singh said petrol pump operators work on thin margins and could not bear the additional cost imposed on larger UPI transactions.
Under the new framework, UPI payments for fuel purchases above Rs 2,000 at petrol stations will attract a fixed merchant discount rate of Rs 5 per transaction. Payments up to Rs 2,000 will continue to have zero MDR. The charge is levied on merchants and payment ecosystem participants, rather than directly on customers.
Singh said an average of about 100 customers at each petrol pump make transactions above Rs 2,000. Based on the association’s estimate, the additional charge would result in a loss of around Rs 590 per day for a pump, or approximately Rs 17,700 per month. He said dealers typically earn about 0.5 per cent as profit and could not recover the new expense from customers.
“We have written a letter to our State-Level Coordinator 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,” Singh said, according to news agency ANI. He added that the association wanted the MDR exemption available for credit and debit card transactions at petrol pumps to be extended to UPI payments.
The association said petrol stations would continue accepting credit and debit cards without any limit. Singh described the move as a measure taken because dealers had no choice under the revised payment-cost structure, while retaining card facilities for customer convenience.
The broader NPCI framework sets an MDR of 0.4 per cent for selected person-to-merchant UPI transactions above Rs 2,000, capped at Rs 300 per transaction. Fuel payments have a separate flat-rate provision of Rs 5 for transactions above the threshold. The government has said about 96 per cent of person-to-merchant UPI transactions will remain unaffected and that UPI payments will continue to be free for customers.
The immediate impact will be concentrated on motorists making fuel purchases above Rs 2,000 through UPI at petrol pumps in Madhya Pradesh. The association’s request for a fuel-sector exemption remains with the government, with the proposed payment restriction scheduled to begin on October 16.
