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Petrol pump dealers have objected to a new charge on certain UPI transactions and warned
they could restrict UPI payments above ₹2,000 if the proposed fee is not withdrawn.
The new payment framework is scheduled to take effect on October 15, 2026. Under the
revised system, a flat ₹5 merchant discount rate (MDR) will apply to UPI transactions above
₹2,000 at petrol pumps and certain other specified categories.
The charge is intended to be borne by the merchant, not the customer. This means consumers will not automatically have an additional ₹5 added to their fuel bill when making an eligible UPI payment.
However, petroleum dealers say the additional transaction cost could put pressure on their margins, particularly because fuel retailing operates with regulated dealer commissions.
Dealer associations have therefore sought an exemption for petrol pumps from the proposed MDR. They have also indicated that, if the issue is not resolved, fuel stations could stop accepting UPI payments above the ₹2,000 threshold and ask customers to use cash or other payment options.
For consumers, UPI payments of ₹2,000 or less at petrol pumps would remain unaffected by the new MDR.
For transactions above ₹2,000, the petrol pump operator would be liable for the applicable ₹5 charge. For instance, if a customer buys fuel worth ₹5,000 and pays through UPI, the customer would still be required to pay ₹5,000. The proposed MDR would be deducted from the merchant side.
The dispute could nevertheless have a direct impact on customers if petrol pumps decide to restrict high-value UPI transactions.
Petrol dealers argue that the additional charge would increase their transaction costs at a time when their earnings on fuel sales are closely tied to regulated dealer margins.
Dealer associations have approached authorities seeking clarity and an exemption from the new charge. They have also warned that accepting UPI for larger transactions could become financially difficult if the MDR is implemented without changes.
A restriction on high-value UPI payments could particularly affect motorists making larger fuel purchases and commercial vehicle operators, who frequently make payments exceeding ₹2,000.
The proposed ₹5 MDR is not a ₹5 surcharge on every UPI fuel payment. It is a merchant-side transaction charge applicable to qualifying payments.
The immediate question for consumers is whether petrol pumps will continue accepting UPI for transactions above ₹2,000 after the new framework takes effect.
The charge is intended to be borne by the merchant, not the customer. This means consumers will not automatically have an additional ₹5 added to their fuel bill when making an eligible UPI payment.
However, petroleum dealers say the additional transaction cost could put pressure on their margins, particularly because fuel retailing operates with regulated dealer commissions.
Dealer associations have therefore sought an exemption for petrol pumps from the proposed MDR. They have also indicated that, if the issue is not resolved, fuel stations could stop accepting UPI payments above the ₹2,000 threshold and ask customers to use cash or other payment options.
For consumers, UPI payments of ₹2,000 or less at petrol pumps would remain unaffected by the new MDR.
For transactions above ₹2,000, the petrol pump operator would be liable for the applicable ₹5 charge. For instance, if a customer buys fuel worth ₹5,000 and pays through UPI, the customer would still be required to pay ₹5,000. The proposed MDR would be deducted from the merchant side.
The dispute could nevertheless have a direct impact on customers if petrol pumps decide to restrict high-value UPI transactions.
Petrol dealers argue that the additional charge would increase their transaction costs at a time when their earnings on fuel sales are closely tied to regulated dealer margins.
Dealer associations have approached authorities seeking clarity and an exemption from the new charge. They have also warned that accepting UPI for larger transactions could become financially difficult if the MDR is implemented without changes.
A restriction on high-value UPI payments could particularly affect motorists making larger fuel purchases and commercial vehicle operators, who frequently make payments exceeding ₹2,000.
The proposed ₹5 MDR is not a ₹5 surcharge on every UPI fuel payment. It is a merchant-side transaction charge applicable to qualifying payments.
The immediate question for consumers is whether petrol pumps will continue accepting UPI for transactions above ₹2,000 after the new framework takes effect.
