Madhya Pradesh petrol pumps to stop UPI payments above Rs 2,000 from October 16 over MDR

Fuel pump dealers across Madhya Pradesh have decided to stop accepting Unified Payments Interface (UPI) payments above Rs 2,000 for petrol and diesel purchases from October 16 if the proposed Merchant Discount Rate (MDR) on such transactions is not withdrawn, the Confederation of All India Traders (CAIT) said on Friday.

The move is expected to affect around 4,700 petrol pumps across the state. Madhya Pradesh Petrol Pumps Dealers Association president Ajay Singh said dealers were concerned about the additional financial burden that MDR could impose on fuel retailers, who operate on relatively narrow margins.

Singh said the association would go ahead with the restriction on UPI payments above Rs 2,000 from October 16 unless the government rolls back the proposed MDR.

“With the new system, a petrol pump has to bear a loss of Rs 17,700 monthly. There are 4,700 fuel stations in MP. Our margin is less so we can't bear this extra expenditure,” Singh told PTI.

CAIT Bhopal district president and Madhya Pradesh media in-charge Dharmendra Sharma said a 0.4 per cent MDR had been proposed on eligible UPI merchant transactions above Rs 2,000. At that rate, a payment of Rs 10,000 would attract a charge of Rs 40. For fuel transactions, a flat MDR of Rs 5 on payments above Rs 2,000 has also been reported.

Sharma said the issue was significant because UPI had been promoted as a key component of Digital India, a cashless economy and greater transparency in commercial transactions.

He argued that introducing additional charges after encouraging merchants and consumers to adopt digital payments could discourage businesses from accepting UPI, particularly in sectors where profit margins are limited.

“This is not merely a matter of a few rupees in cost, but a question of the direction of policy,” Sharma said.

CAIT has urged the Union government to reconsider the proposed charges and keep business transactions, including petrol and diesel purchases, exempt from MDR.

Sharma said traders were already facing rising operational costs, competition and limited margins, and that an additional expense on digital transactions could further affect their profitability.

He also cautioned that restrictions on UPI payments at petrol pumps could undermine the wider adoption of digital payments in India, whose UPI system has emerged as a major digital-payment platform.

The Madhya Pradesh dealers' decision will now depend on the government's response to their demand for withdrawal of the proposed MDR.

with inputs from PTI