The government is likely to examine a demand seeking exemption from Merchant Discount Rate (MDR) on certain UPI transactions, including a request from petrol pump dealers to exclude fuel outlets from the
new charges.
As per a report by Moneycontrol, the Department of Financial Services (DFS) may review the representation submitted by the All India Petroleum Dealers Association (AIPDA).
However, no final decision has been taken so far, and the matter could be discussed at a higher level before any changes are considered.
Petrol pump dealers seek relief from UPI MDR charges
AIPDA President Ajay Bansal wrote to Finance Minister Nirmala Sitharaman on September 16, seeking complete exemption for petrol pumps from MDR and related transaction charges on UPI payments above ₹2,000.
The association said fuel retailers operate on fixed margins decided by oil marketing companies, with earnings largely linked to fuel volumes rather than the value of individual transactions. Therefore, dealers cannot offset additional payment processing costs by increasing their income, it argued.
AIPDA has requested that petrol pumps be exempted from both percentage-based MDR and fixed transaction charges if the broader framework continues.
New UPI MDR rules face resistance from fuel retailers
The review comes ahead of the implementation of the revised UPI MDR framework from October 15. Under the new rules, eligible person-to-merchant UPI transactions above ₹2,000 will attract MDR, with a standard rate of 0.4%.
Certain sectors, including fuel outlets, will face a flat MDR of ₹5 on qualifying transactions, while payments up to ₹2,000 will remain outside the framework.
Petrol pump dealers have opposed the proposed charges, saying they could impact their already limited margins. Associations in Madhya Pradesh and Punjab have announced plans to stop accepting UPI payments above ₹2,000 from October 15 if no relief is provided.
Dealers in Madhya Pradesh have said customers would still be able to use card payments, while state-level associations have also urged the government to exempt fuel retailers from the charges.
