Mumbai petrol pump owners threaten to stop UPI payments from October 15 over MDR charges

Petrol pump owners in Mumbai have threatened to stop accepting UPI payments from October 15 if the Centre does not exempt fuel retailers from the revised merchant discount rate (MDR) on person-to-merchant transactions above Rs 2,000. The Petrol Dealers Association has submitted representations to the Reserve Bank of India and the Finance Ministry seeking complete waiver for petrol pumps.

The Finance Ministry recently announced a revised MDR regime imposing a uniform 0.4% charge on P2M UPI transactions above Rs 2,000, with exceptions only for small vendors and micro merchants. Dealers argue that since fuel prices are regulated, they cannot pass transaction costs to customers, and the charge threatens their already thin margins. Association president Chetan Modi stated petrol pumps have invested heavily in digital infrastructure under the assurance of a zero-MDR environment, and the revised rules create an "existential crisis."

Dealers note their commission margins have remained unchanged for years while operational costs have risen. A UPI withdrawal could inconvenience thousands of motorists who increasingly rely on digital payments.