Mumbai petrol pumps may stop accepting UPI payments from 15 October if the Centre does not exempt fuel retailers from a proposed 0.4% merchant discount rate on UPI transactions above Rs 2,000, according to the Mumbai Petrol Dealers Association.
The association has written to the Reserve Bank of India and the Union Ministry of Finance seeking a complete exemption for petrol pumps from the revised merchant discount rate, or MDR, framework. It has warned that failure to grant the exemption could lead dealers in Mumbai to stop accepting UPI payments from the specified date.
Under the revised arrangement reported by Loksatta, a 0.4% charge will apply to person-to-merchant UPI transactions above Rs 2,000. The framework provides certain exceptions for small vendors and micro-merchants, but petrol pump dealers are seeking separate relief because of the nature of fuel retailing and the margins involved.
The dealers have argued that petrol prices are controlled and that the additional transaction cost cannot be directly passed on to customers. They say the charge would further reduce already limited dealer margins, particularly because fuel retailers are not in a position to add a separate payment fee to the customer’s bill.
A UPI payment of Rs 3,000, for example, would attract a reported MDR of Rs 12 at the proposed 0.4% rate. The financial effect would depend on transaction volumes and the applicable rules, but the association has described the potential burden as significant for petrol pump operators.
The dispute also highlights the operational dependence of urban fuel stations on digital payment systems. The association said petrol pumps had invested substantially in digital payment infrastructure as part of the Digital India push. Dealers also stated that their commission rates had not changed for several years, while operating and compliance costs had increased.
For Mumbai motorists, the immediate consequence of a UPI stoppage would be the need to carry cash or use other payment methods at participating fuel stations. The reported warning concerns UPI acceptance and does not indicate that fuel sales themselves would stop. The impact would therefore depend on whether the proposed exemption is granted and whether dealers proceed with the threatened payment change.
The association’s request has been addressed to the RBI and the Finance Ministry. The next stated milestone is 15 October, when Mumbai petrol pump dealers have warned they could discontinue UPI acceptance if their demand for exemption from the MDR charge is not accepted.
