The dispute comes as fuel retailers seek clarity on how the proposed MDR will be implemented and whether petrol pumps will be exempted from the charge
KRC TIMES National Bureau
New Delhi | Petrol pump dealers in several states have threatened to stop accepting UPI payments of Rs 2,000 and above if they are required to bear a flat Rs 5 merchant discount rate (MDR) on such transactions.
Dealers in Delhi-NCR, Punjab, Uttar Pradesh, Maharashtra, Karnataka and Rajasthan have raised concerns that the proposed charge could further erode their margins, which they estimate at around Rs 2.40 to Rs 3.40 per litre.
Monty Sehgal, spokesperson for the Federation of All India Petroleum Traders (FAIPT), said fuel retailers could be forced to restrict UPI payments above Rs 2,000 unless they are granted an exemption.
The issue follows a clarification by the National Payments Corporation of India (NPCI) that UPI transactions for fuel purchases above Rs 2,000 will attract a flat Rs 5 MDR, while transactions below the threshold will continue to carry zero MDR.
The Akhila Karnataka Federation of Petroleum Traders (AKFPT) has sought an exemption for fuel retailers, arguing that dealers cannot raise petrol and diesel prices to recover digital payment charges because retail prices are fixed by oil marketing companies.
Dealer Hemant Sirohi of Uttar Pradesh, citing official UPI transaction data, said petrol pumps collectively process around 23.9 million UPI transactions worth Rs 1,573 crore. About 20 per cent of these transactions are estimated to be above Rs 2,000.
Sirohi estimated that the proposed MDR could add around Rs 230-250 a day to the costs of an individual petrol pump.
The All India Petroleum Dealers Association (AIPDA) has also urged the government to completely waive MDR for fuel stations. The association said petrol and diesel are essential commodities and transactions above Rs 2,000 are common at fuel stations.
India had 1,03,023 petrol pumps as of April 2026, with more than 90 per cent operated by Indian Oil, Bharat Petroleum Corporation Limited (BPCL) and Hindustan Petroleum Corporation Limited (HPCL).
The proposed charge has also triggered concerns about its impact on consumers and digital payment adoption. BimaPay CEO Hanut Mehta said passing digital payment costs on to consumers could affect confidence in digital payments, particularly among price-sensitive users.
The dispute comes as fuel retailers seek clarity on how the proposed MDR will be implemented and whether petrol pumps will be exempted from the charge.
