‘May Have To Stop Accepting UPI Above Rs 2,000’: Petrol Pump Dealers Fear MDR Will Eat Into Margins

For petrol pump owners, who operate on wafer-thin margins, the prospect of a flat merchant discount rate (MDR) of ₹5 on UPI transactions of ₹2,000 and above has raised concerns that they may have to stop accepting digital payments above the threshold.

Fuel retail businesses operate on small margins, and the proposed MDR has added to concerns among petrol pump dealers over the impact on their earnings.

“We may have to stop accepting UPI payments of ₹2,000 and above if exemption is not allowed to fuel retailers,” Federation of All India Petroleum Traders (FAIPT) spokesperson Monty Sehgal was quoted as saying by the Hindustan Times.

The newspaper, which first reported the concerns among fuel retailers, said petrol pump dealers in Delhi-NCR, Punjab,

Uttar Pradesh, Mumbai, Karnataka and Rajasthan described the proposed charge as an “additional burden”.

The dealers said the MDR could eat into their margins of around ₹2.40-3.40 per litre, which are determined by the government through its oil marketing companies (OMCs).

The Hindustan Times did not name the individual dealers it spoke to.

Meanhwile, traders’ associations in the capital said they would now push for cash payments to avoid additional costs on digital payments.

Kamla Nagar Market Association president Nitin Gupta said traders had supported the government’s push for digital payments, but would now encourage cash transactions if they were required to bear an additional charge.

“We were already paying transaction charges and 18 per cent GST. Now if the government charges us on UPI MDR, then we will promote cash. When the government came with the UPI payment method, we supported it,” Gupta said.

“Now if we are charged for UPI transactions also, then we will not support it and start promoting cash payments. Why should we pay transaction charges?” he asked.

Gupta urged shopkeepers and traders to start encouraging cash payments, saying accepting the new charge could lead to an increase in the rate in the future.

“We have got used to digital payments. Even when we go to the market, sometimes we don’t even carry cash. It will be tough for us to go back to cash payments,” he added.

New Delhi Traders Association general secretary Amit Gupta told PTI that the additional charge would make UPI payments a costly option for traders who are already operating on tight margins.

“UPI was introduced to make digital payments easier for both traders and customers. If traders are now asked to bear an additional charge on transactions above Rs 2,000, many of them will prefer cash payments. We have no issue with digital payments, but the additional cost should not be imposed on traders,” he said.