Petrol pump dealers oppose new UPI transaction charge, seek exemption

Petrol pump dealers across the country have objected to a new charge on UPI payments due to take effect from October 15, 2026. From that date, some UPI transactions above Rs 2,000 will attract a Merchant Discount Rate (MDR) of 0.4 percent, according to information that has emerged.

Customers will not have to pay this charge directly. Instead, merchants will have to bear the MDR as well as the 18 percent GST charged on it, out of their own pocket. This is why petrol pump dealers have come out against the charge.

This means that if a customer pays more than Rs 2,000 through UPI for petrol, diesel or anything else, no separate MDR or GST will be collected from them. But the charge will be deducted from the merchant's account, which has caused concern among dealers.

Dealers say the petrol pump business already runs on a fixed commission, so an additional charge on every digital transaction could affect their profits. Since the commission earned from selling petrol and diesel is limited, this extra cost on UPI transactions is a significant financial burden for dealers. This is why a demand has been raised to exempt petrol pumps from the MDR.

The All India Petroleum Dealers Association has demanded that petrol pumps be exempted from the UPI MDR charge. The association's president, Ajay Bansode, has written a letter to Union Finance Minister Nirmala Sitharaman on the matter, according to reports. In addition, representatives of petrol pump dealers from across the country have also raised their concerns and demands before senior officials of the petroleum ministry. The matter is expected to be discussed by the government.

It is being said that for some fuel sector transactions, UPI payments above Rs 2,000 will attract a maximum MDR of Rs 5, instead of 0.4 percent. This means the actual charge for petrol pump dealers may not be 0.4 percent but up to Rs 5 per eligible transaction, suggesting a cap on the MDR for larger fuel transactions. However, the overall impact of the charge will depend on the number of transactions.

If the petrol pump dealers' demand for exemption from the MDR is not accepted, some petrol pump organisations have already warned that they may not accept UPI payments above Rs 2,000 from October 15, 2026. Some dealers in Madhya Pradesh have said they will not accept UPI payments above Rs 2,000 from October 16. However, card payment facilities will continue as before.

All eyes are now on whether the government accepts the petrol pump dealers' demand for exemption from the MDR. Meanwhile, a final decision on the UPI transaction charge and clear official information on its implementation is considered necessary.