Mumbai petrol pumps may stop accepting UPI payments from 15 October after the Mumbai Petrol Dealers Association objected to a proposed 0.4% merchant discount rate on person-to-merchant UPI transactions above Rs 2,000. The association has written to the Reserve Bank of India and the Union Finance Ministry seeking a complete exemption for fuel stations, warning that the payment change would increase operating costs for dealers and inconvenience motorists.
The proposed framework, as reported by Loksatta, applies a 0.4% charge to UPI transactions above Rs 2,000. The reported arrangement includes some exemptions for small vendors and micro-merchants, but petrol pump dealers are seeking separate protection from the charge.
The association has argued that fuel prices are regulated and that dealers cannot pass an additional transaction cost directly on to customers. It said the charge could reduce margins that are already limited, particularly because a higher-value fuel purchase is more likely to cross the proposed threshold.
A UPI stoppage at petrol pumps would affect one of the most routine digital-payment points in Mumbai’s transport system. Motorists would need to carry cash or use other payment methods for fuel purchases if dealers implement the warning. The reported threat concerns UPI acceptance and does not indicate that petrol sales themselves would stop.
Petrol dealers also said they had invested substantially in digital-payment infrastructure as part of the Digital India programme. This includes the systems and devices required to accept electronic payments at fuel stations, which process frequent transactions from private motorists, commercial drivers and other road users.
The association further stated that dealer commissions had not changed for several years while operational and compliance costs had risen. It has asked the Finance Ministry and the RBI to exclude petrol pumps from the proposed MDR arrangement, arguing that the additional payment cost would otherwise become a direct financial burden on fuel-station operators.
The warning places fuel stations at the intersection of two policy objectives: expanding digital payments and ensuring that regulated retail businesses can absorb the cost of accepting them. The immediate issue for Mumbai motorists will depend on the response from the Union Finance Ministry and the RBI before the proposed 15 October deadline. The association’s request for a complete exemption remains under consideration, according to the report.
