Petrol pump dealers in Madhya Pradesh have announced that they will stop accepting UPI payments for fuel purchases above ₹2,000 from October 15, citing concerns over the Merchant Discount Rate (MDR) applicable to digital transactions.
UPI Payments to Face Restrictions
Customers purchasing petrol or diesel worth more than ₹2,000 at participating petrol pumps in Madhya Pradesh may have to pay in cash from October 15. The decision has been announced by the Madhya Pradesh Petroleum Dealers Association as part of its protest against the MDR structure for UPI transactions.
According to the dealers, UPI payments will continue to be accepted for fuel purchases up to ₹2,000. However, customers crossing the ₹2,000 threshold will be required to use cash or another accepted payment method.
Why Are Petrol Pump Dealers Opposing MDR?
The issue revolves around the Merchant Discount Rate, a charge associated with certain UPI merchant transactions. Under the revised structure, eligible large merchant transactions above ₹2,000 can attract an MDR of 0.40%.
For example, a ₹3,000 UPI transaction under a 0.40% MDR would result in a charge of ₹12 for the merchant.
The government has maintained that the MDR should not become an additional financial burden on ordinary consumers. However, confusion and concerns among traders and businesses over how the charges will affect transactions have led to protests in several parts of the country.
Impact on Customers
The proposed restriction could particularly affect customers who regularly use UPI for high-value fuel purchases. Those spending more than ₹2,000 will need to keep cash available if the petrol pump does not offer another digital payment option.
The move also highlights the wider debate around the cost of digital payments for merchants as UPI continues to be one of India's most widely used payment systems.
Dealers Seek Clarity and Relief
Petrol pump dealers have been raising concerns over the additional cost associated with UPI transactions and are seeking relief from MDR-related charges on fuel purchases.
The Madhya Pradesh decision is likely to add to the ongoing discussion between merchant associations, payment service providers and the government over how UPI charges should be structured without discouraging digital payments.
For now, customers visiting petrol pumps in Madhya Pradesh should be prepared to make cash payments for fuel purchases exceeding ₹2,000 from October 15, as announced by the dealers' association.
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