The All India Petroleum Dealers Association has appealed to the Union Finance Minister for an immediate waiver of Merchant Discount Rate (MDR) charges on exceeding ₹2,000.
In a formal letter sent on Wednesday, Association President Ajay Bansal urged government intervention regarding high payment processing fees.
The association emphasised that because dealer earnings are based on fixed per-litre margins rather than overall transaction values, percentage-based transaction levies directly deplete their net income.
Highlighting their financial strain, the association pointed out that dealer commissions have not been updated since October 2017. Over the same period, key operational overheads—including electricity bills, staff wages, and compliance expenditures—have surged significantly.
Although pump owners have repeatedly engaged with oil marketing companies to resolve the matter, these negotiations have yielded no results, leaving operators with increasingly razor-thin profit margins.
“Dealer margins are determined by the Oil Marketing Companies (OMCs) under the guidance of the Ministry of Petroleum and Natural Gas and are primarily fixed on a per-litre basis, rather than as a percentage of the transaction value. Dealers therefore have no mechanism to increase their earnings in proportion to the value of a transaction,” the association said in the letter.
“Even a seemingly modest fixed charge of ₹5 per UPI transaction above ₹2,000 would have a substantial cumulative impact. Petrol pumps process a very large number of transactions every day, and the multiplication of even a small charge across thousands of transactions would create a significant recurring financial burden. A percentage-based MDR of up to 0.4% would be even more disproportionate to the economics of petroleum retailing,” the letter added.
Fuel retailers argued that the payment channel a customer uses does not change the basic nature or profitability of a fuel sale.
They pointed out that the government has previously recognised the unique economics of petroleum retail by granting special card-payment exemptions—a policy framework that dealers contend should logically apply to high-value UPI transactions today.
The association warned that unmitigated processing fees might force dealers to cap or discourage UPI payments above certain limits simply to safeguard their livelihoods. Such restrictions would directly undermine the central government’s larger mission to expand digital payment adoption, enhance transaction transparency, and improve consumer convenience.
To maintain business viability across retail outlets, the association submitted two specific solutions to the Centre:
Alternatively, if a standard industry threshold is maintained, provide petrol pumps with explicit exemptions from both percentage-based MDR and fixed fees for UPI transactions above ₹2,000.
“Digital payments have significantly enhanced customer convenience, transaction transparency and operational efficiency in fuel retailing. Petroleum dealers should therefore not be financially penalised for facilitating and encouraging such digital transactions,” the letter said.
