In a big announcement, the Madhya Pradesh Petrol Pump Dealers Association has decided that petrol pumps across the state will not accept UPI payments above
₹2,000, with the new system set to come into effect from October 16. The decision comes in the wake of the newly imposed Merchant Discount Rate (MDR) charge on UPI transactions, which the association claims will burden petrol pump dealers with an additional cost of ₹17,400 every month. "We have taken this decision because of the MDR charge," said Madhya Pradesh Petrol Pump Dealers Association President Ajay Singh. A new charge on some UPI payments will be paid by merchants from October 15, but the government is now working with payment gateways to make sure the cost is not passed on to customers. The Finance Ministry has started discussions with payment aggregators and other stakeholders in the UPI ecosystem to ensure merchants do not recover the Merchant Discount Rate (MDR) from consumers, government sources said. Notably, banks have been instructed to ensure merchants do not pass the MDR cost on to customers, the ministry of finance clarified on X. Furthermore, the ministry said that UPI apps cannot impose separate platform charges on users.
Govt Works On Mechanism To Protect Customers
From October 15, a 0.4 per cent MDR will apply to person-to-merchant UPI payments above Rs 2,000. The charge will be paid by merchants and will be capped at Rs 300 for transactions of Rs 75,000 or more. Payments between individuals and most everyday merchant payments will continue to remain free. The ministry is preparing a monitoring mechanism to ensure that the MDR burden is not passed on to customers, sources said.
Payment aggregators and other stakeholders have already been sensitised about the new charge, with the government seeking to prevent any additional burden on UPI users.
Govt Does Not Expect UPI Users To Shift To Cash
As per the report, citing government sources, only around 4 per cent of total UPI transaction volume will be affected by the new MDR, and therefore the measure is not expected to reduce UPI usage.On concerns that users could return to cash after October 15, sources said this was unlikely as RuPay debit card transactions remain completely free, regardless of the amount.
The government also does not expect the MDR to have a significant inflationary impact or lead to higher prices for goods and services, sources said. The Finance Ministry has separately rejected allegations that the MDR was introduced because of US pressure.
"The allegation that MDR has been introduced under any external influence is patently false and misleading," the Department of Financial Services said in a post on X.
The clarification came after Opposition parties, including the Congress, alleged that the government had acted under US pressure while introducing the MDR.
