SLUG
UPI Fuel MDR Exemption
NEW DELHI
Representatives of the All-India Petroleum Dealers Association (AIPDA) met senior Petroleum Ministry officials on Thursday to seek exemption from the merchant discount rate (MDR) on UPI transactions for fuel purchases.
The dealers’ body said the additional MDR cost could put pressure on dealer margins because retail fuel sales are conducted on prescribed commissions.
Under the new UPI framework, petrol and diesel purchases above Rs 2,000 will attract a flat MDR of Rs 5 per transaction. Dealers said such transactions account for around 30-40 per cent of total purchases across retail outlets in India.
During the meeting, Petroleum Ministry officials explained that the MDR was required to support development of the next layer of India’s UPI digital infrastructure.
“Petroleum dealers have been at the forefront of adopting digital payments and have worked closely with the government to promote their use across the country,” AIPDA said in a statement.
The association said it would continue discussions with the government and seek a solution that addresses concerns of consumers, dealers and other stakeholders in the UPI ecosystem.
Dealers have raised concerns over the new charge as digital payments have become an important payment method at petrol pumps, particularly for higher-value purchases. They are seeking a complete exemption for fuel retail transactions, citing the sector’s prescribed commissions and narrow margins.
The Finance Ministry has clarified that MDR is neither a tax nor a charge collected by the government or NPCI. Instead, it is distributed among payment ecosystem participants, including banks and payment application providers, to support UPI operations and expansion.
The Rs 5 flat MDR will also apply to transactions above Rs 2,000 in other essential and thin-margin sectors, including railways, telecommunications, insurance and agricultural inputs.