Petrol pump dealers in several states have threatened to stop accepting UPI payments of ₹2,000 and above if they are required to pay a flat ₹5 merchant discount rate (MDR).
Dealers in Delhi-NCR, Punjab, Uttar Pradesh, Maharashtra, Karnataka and Rajasthan have raised concerns over the proposed charge. They say the additional cost could put further pressure on already narrow margins. Petrol pump dealers estimate their margins at around ₹2.40 to ₹3.40 per litre. They argue that absorbing a ₹5 charge on larger UPI transactions could make digital payments more expensive for fuel retailers.
Why are petrol pump dealers opposing the ₹5 UPI charge?
The issue follows a clarification from the National Payments Corporation of India (NPCI) stating that UPI transactions for fuel purchases above ₹2,000 will attract a flat ₹5 MDR. Transactions below ₹2,000 will continue to have zero MDR.
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Monty Sehgal, spokesperson for the Federation of All India Petroleum Traders (FAIPT), said fuel retailers could be forced to restrict UPI payments above the ₹2,000 limit if the government does not provide an exemption.
Dealers say they have limited options to recover the proposed charge. Petrol and diesel prices at retail outlets are fixed by oil marketing companies, meaning individual dealers cannot simply increase fuel prices to cover digital payment costs. The Akhila Karnataka Federation of Petroleum Traders (AKFPT) has therefore asked for fuel retailers to be exempted from the MDR.
How much could the new MDR cost petrol pumps?
The potential cost could become significant because UPI is widely used at fuel stations. Uttar Pradesh-based dealer Hemant Sirohi, citing official UPI transaction data, said petrol pumps collectively process around 23.9 million UPI transactions worth ₹1,573 crore.
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Around 20% of these transactions are estimated to be above ₹2,000. Sirohi estimated that the proposed ₹5 MDR could add around ₹230 to ₹250 a day to the costs of an individual petrol pump. For dealers operating on margins of only a few rupees per litre, they say even this additional daily cost matters.
Dealers want fuel stations exempt from MDR
The All India Petroleum Dealers Association (AIPDA) has also called for a complete waiver of MDR for fuel stations. The association argues that petrol and diesel are essential commodities and that transactions above ₹2,000 are common at petrol pumps.
Dealers are also concerned about what could happen if they start limiting UPI payments. For many consumers, especially those who do not carry cash, UPI has become a routine way to pay for fuel. Restricting higher-value UPI payments could therefore make digital payments less convenient at petrol stations.
Indrani Priyadarshini is a journalist and editorial professional specialising in technology, artificial intelligence, smart cities, green energy, and digital transformation. With over four years of experience in tech journalism and digital media, she is known for turning complex industry developments into clear, engaging, and insightful stories. Her expertise spans reporting, editorial strategy, digital publishing workflows, and in-depth coverage of emerging technologies shaping the future.
