Petrol pump dealers in Madhya Pradesh will stop accepting UPI payments above Rs 2,000 from October 16, citing the cost of a new merchant discount rate (MDR) framework for fuel transactions. The decision, announced by the Madhya Pradesh Petroleum Dealers Association, could push customers making larger fuel purchases towards debit or credit cards at participating stations.
Association president Ajay Singh said the move followed the announcement of the revised UPI MDR framework. According to Singh, petrol pump operators work on profit margins of around 0.5% and cannot absorb the additional charge without affecting their earnings.
“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,” Singh said, according to news agency ANI. He said around 100 customers at each petrol pump make transactions above Rs 2,000 on average, resulting in an estimated loss of about Rs 590 per day, or approximately Rs 17,700 per month.
The association said petrol pumps would continue accepting debit and credit card payments without a transaction limit. Singh urged the government to extend to UPI the MDR exemption already available to petrol stations for credit and debit card transactions.
Under the framework introduced by the National Payments Corporation of India on September 15, selected person-to-merchant UPI transactions above Rs 2,000 will attract an MDR of 0.4%, capped at Rs 300 per transaction. Fuel payments have a separate provision: UPI transactions above Rs 2,000 at petrol stations will attract a fixed MDR of Rs 5 per transaction, while transactions up to Rs 2,000 will continue to carry zero MDR.
MDR is charged to the merchant and is not directly payable by the customer. The government has said that around 96% of person-to-merchant UPI transactions will remain unaffected under the revised framework, while customers will continue to use UPI without a transaction fee. The cost will instead be borne by merchants and other participants in the digital payments ecosystem.
For motorists in Madhya Pradesh, the proposed restriction means that customers making fuel purchases above Rs 2,000 may need to use cards or split payments if individual petrol pumps enforce the association’s decision. The association’s position remains subject to the government’s response to its request for an exemption.
The dealers’ association has written to the State-Level Coordinator seeking parity between UPI and card-payment treatment. Petrol pumps are expected to begin applying the proposed UPI limit from October 16 unless the government changes the MDR arrangement or grants the requested exemption.
