Fuel retailers and petrol pump operators have urged the government to exempt petrol and diesel purchases of above ₹2,000 from a flat Merchant Discount Rate (MDR) of ₹5 per transaction.
The petrol pump dealers expressed that they already operate on thin margins and will be forced to stop accepting UPI payments of ₹2,000 and above.
Monty Sehgal, National Spokesperson for the Federation of All India Petroleum Traders (FAIPT), told businessline: “We may have to stop accepting UPI payments of ₹2,000 and above if exemption is not allowed to fuel retailers. With wafer-thin margins, not revised in line with inflation since 2017, it is very difficult for petrol dealers to incur any such charges.”
A nominal hike in margins took place in 2024 but was inadequate to meet fixed establishment costs, Sehgal added.
Hemant Sirohi, Member of Empower Petroleum Dealers Foundation (EPDF), said: “I am thankful to the government that it has capped the MDR at a flat rate of ₹5 per transaction. In the past, the MDR of credit and debit cards was being absorbed by the OMCs. A similar arrangement can be made or the dealer margin should be increased adequately to absorb the MDR cost.”
Sirohi said that transactions above ₹2,000 are around 20 per cent of the cumulative transactions at retail outlets (ROs). As per National Payments Corporation of India’s (NPCI) June 2026 numbers, there are roughly 23.9 million UPI transactions at all ROs pan-India.
Roughly, 6-7 crore consumers visit a fuel bunk every day consuming a total of around 5.4-5.6 million barrels per day across roughly 1.07 lakh petrol pumps.
The value of these transactions is around ₹1,573 per day. With 20 per cent of transactions being above ₹2,000, the MDR will be ₹2.4 crore per day. Breaking this down for over a lakh ROs comes to ₹230-250 per day per RO, he added.
“This is an average. The MDR is higher for ROs on highways (₹500-1,400 per day) and semi-urban (₹300-600 per day). Dealer margin for petrol is ₹3.40–3.70 per litre and for diesel it is ₹2.40–2.70,” Sirohi added.
The Akhila Karnataka Federation of Petroleum Traders (AKFPT) has also urged Finance Minister Nirmala Sitharaman and Oil Minister Hardeep Singh Puri. On Tuesday, it expressed serious concern on the possible introduction of MDR on certain UPI merchant transactions.
“Petroleum retail outlets cannot be compared with ordinary retail businesses. The selling prices of petrol and diesel are determined by the respective Oil Marketing Companies (OMCs), and petroleum dealers operate on a prescribed dealer commission and margin structure. A dealer does not have the freedom to increase the Retail Selling Price (RSP) of petrol or diesel merely because the cost of accepting a particular digital-payment mode increases,” said K M Basavegowda, President of AKFPT, in the letter.
He highlighted that during the post-demonetisation period commencing in November 2016, petroleum dealers supported the government in promoting cashless and digital transactions. The government had exempted the RO dealers from MDR charges, which was absorbed by the OMCs.
“This constitutes a clear and important policy precedent. AKFPT respectfully submits that the same principle needs to be applied to any proposed UPI MDR framework in 2026 as there is no justification for departing from the protection afforded to petroleum dealers under the 2016-17 arrangement,” he urged.
Published on September 16, 2026
