The Indian Express ·
Economy, business and finance
Petrol pumps in Mumbai threaten to stop UPI payments over revised MDR
Since Centre has introduced a 0.4 percent MDR on person-to-merchant UPI transactions above Rs 2,000, petrol pumps have raised concerns over the additional costs
Petrol pumps across Mumbai may discontinue UPI payments from October 15 if the Centre does not exempt fuel retailers from the revised merchant discount rate (MDR) on UPI transactions above Rs 2,000.
The Petrol Dealers Association of Mumbai on Wednesday wrote to the RBI and Finance Ministry, seeking a complete waiver for petrol pumps. It warned that dealers would be forced to withdraw UPI facilities if the charges were not rolled back.
The Centre has introduced a 0.4 percent MDR on person-to-merchant UPI transactions above Rs 2,000, with exemptions for certain small and micro merchants. Petrol pumps, which frequently receive transactions above the threshold, have raised concerns over the additional cost.
The association said more than 60 percent of fuel sales at its outlets are now through digital payments, following investments made on the assurance of a zero-MDR regime.
“Our retail outlets have achieved over 60 percent digitalisation of all fuel and diesel sale transactions through intensive infrastructural deployment under the explicit assurance of a zero-MDR environment. However, the revised implementation creates an existential crisis for retailers due to multiple critical constraints,” said Chetan Modi, President of the Petrol Dealers Association of Mumbai
Dealers said their commissions have remained unchanged for nearly a decade while operating and compliance costs have risen. With fuel prices regulated and transaction charges difficult to pass on to customers, they would have to absorb the MDR, they said.
The association’s concerns come amid similar apprehensions among merchants. As per a recent study by consumer community platform LocalCircles, only 17% of merchants surveyed were willing to bear the 0.4% MDR on UPI transactions above Rs 2,000, while over 41 percent opposed bearing the charges.