Petrol pump dealers in India have called on the government to waive all charges on UPI transactions at fuel outlets, warning that proposed fee changes could hurt their margins and discourage digital payments.
Petrol pump dealers have urged the Indian government to exempt fuel outlets entirely from charges on UPI payments, warning that even the planned flat fee on higher-value transactions would squeeze already thin operating margins.
The All India Petroleum Dealers Association, led by president Ajay Bansal, has written to Finance Minister Nirmala Sitharaman seeking relief before the revised merchant payment rules take effect on 15 October. According to the proposal, person-to-merchant UPI payments above ₹2,000 will generally attract a merchant discount rate of 0.4 per cent, capped at ₹300 for transactions of ₹75,000 and above. Fuel, railways, telecoms, insurance and agricultural inputs have been set apart as essential sectors and would face a flat ₹5 charge on payments above ₹2,000.
Dealers say that model does not reflect the economics of petrol retailing. Their earnings are fixed largely on a per-litre basis by oil marketing companies, rather than rising with the size of a transaction, so they argue they have no way to recover payment-processing costs through higher margins. In its letter, the association said the fee would be especially difficult to absorb because fuel stations handle large numbers of transactions each day.
The group has asked for a complete waiver of merchant discount rate charges and related transaction fees on all UPI payments at retail fuel outlets. As an alternative, it wants petrol pumps specifically exempted from both percentage-based and fixed per-transaction charges if the ₹2,000 threshold remains. Dealers also warned that the levy could push some outlets to discourage higher-value UPI payments, which would run counter to the government’s push for digital payments and greater transaction transparency.
The Finance Ministry has said the new framework is designed to keep UPI free for individuals and for most smaller merchant payments, while creating a sustainable revenue stream for the wider payments ecosystem. It has also said merchant charges are not a tax and will not be collected by the government or the National Payments Corporation of India. But the dealers’ association says fuel retail deserves separate treatment, pointing to earlier concessions on card-payment costs and arguing that petrol and diesel sales should not be penalised simply because the customer chooses a digital payment method.
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