Petrol pump dealers warn: Cash only for UPI payments over ₹2,000
Dealers from Mumbai and New Delhi demand complete abolition of MDR for petrol pumps.
Petrol pump dealers across the country have warned of halting UPI payments of ₹2,000 or more. Dealers say that if they have to pay a fixed Merchant Discount Rate (MDR) of ₹5 on every such transaction, it will add an extra burden on petrol pump businesses that are already operating on very low margins.
According to a report by Hindustan Times,
dealers say that in such a situation, they may be forced to accept cash payments from customers instead of digital payments.
Petrol pump dealers in Delhi-NCR, Punjab, Uttar Pradesh, Mumbai, Karnataka, and Rajasthan have expressed concern over this issue. They say that,
they already receive a limited margin of about ₹2.40 to ₹3.40 per litre on the sale of petrol and diesel. This margin is determined by the government through oil marketing companies (OMCs).
Monty Sehgal, spokesperson for the Federation of All India Petroleum Traders (FAIPT), said,
“If fuel retailers are not given a discount, we may have to stop accepting UPI payments of ₹2,000 and above.”
As of April 2026, there are 1,03,023 petrol pumps in the country. More than 90% of these petrol pumps are operated by three government oil companies—Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL). The remaining petrol pumps are associated with private oil companies like Nayara, Jio-BP, and Shell.
The Akhil Karnataka Federation of Petroleum Traders (AKFPT) has written to the central government and government oil companies demanding a waiver of MDR for petrol pumps.
Dealers argue that petrol pumps cannot be compared to regular retail stores. The prices of petrol and diesel are set by oil marketing companies, and dealers are paid based on predetermined commissions and margins. Dealers say that if the cost of accepting digital payments increases, they cannot raise the prices of petrol or diesel at their discretion.
Hemant Sirohi, a dealer from Uttar Pradesh and a member of the Empowering Petroleum Dealers Foundation (EPDF), said that according to available official UPI transaction data, there are about 2.39 crore such payments across petrol pumps in the country, amounting to approximately ₹1,573 crore. About 20% of these transactions are over ₹2,000. According to him, this could impose an additional financial burden of about ₹230 to ₹250 per day on a petrol pump.
Two dealers from Mumbai and New Delhi have demanded the complete abolition of MDR for petrol pumps. They argue that placing the responsibility on oil companies is not a permanent solution.
According to an FAQ issued by the National Payments Corporation of India (NPCI), a flat fee of ₹5 will be applicable on fuel payments over ₹2,000 at petrol pumps.
Meanwhile, for fuel payments of less than ₹2,000, MDR will be 0%. This means there will be no MDR on small fuel payments made by regular customers.
NPCI states that,
the flat fee of ₹5 has been set to protect petrol pump operators from the higher processing costs associated with large fuel transactions.
The All India Petroleum Dealers Association (AIPDA) wrote to the government on September 16, demanding a complete waiver of UPI transactions over ₹2,000 from MDR.
The association argues that petrol and diesel are essential commodities and payments over ₹2,000 at petrol pumps are common. In this context, UPI has become a major medium for digital payments for customers.
Industry experts say that this dispute could also impact the expansion of digital payments. BimaPay CEO Hanut Mehta said that,
consumer surveys have already indicated concerns that some merchants may pass on the cost of MDR to customers, although regulations state that the responsibility for MDR lies with the merchant.
He added that if regulations are not effectively enforced, it could undermine public trust in digital payments, especially among first-time users of digital financial services and price-sensitive customers.