The Madhya Pradesh Petroleum Dealers Association has confirmed that members will cease accepting Unified Payments Interface (UPI) transactions exceeding Rs 2,000 beginning October 16. This decision is attributed to the newly proposed 0.4 per cent Merchant Discount Rate (MDR) charge on such payments. Association president Ajay Singh explained that fuel pump operators generally work with narrow profit margins and cannot absorb these additional costs.

In a communication to their State-Level Coordinator, the association expressed concerns regarding the government’s mandate, which will impose this MDR fee on UPI transactions exceeding the specified limit. Ajay Singh highlighted that, on average, each petrol station processes around 100 transactions above Rs 2,000 daily, potentially resulting in a financial loss of approximately Rs 590 per day or around Rs 17,700 each month.

Singh noted that with a profit margin of only around 0.5 per cent, petrol pump dealers are ill-equipped to bear any extra expenses. The association’s decision represents a significant shift in how UPI payments will be handled at these establishments.

Limited Payment Options Available

While UPI payments will be restricted, consumers will still have the choice of using credit or debit cards without limitations. Singh clarified that transactions through these conventional payment methods would not be impacted by the new MDR charges, thereby ensuring continued service to customers despite the restrictions placed on UPI payments.

Singh underscored the importance of adapting to the prevailing circumstances, expressing hope that the government would consider extending the existing MDR exemption available to credit and debit card transactions to include UPI payments. This extension is seen as vital for maintaining the viability of petrol pump operations.

Concerns were raised regarding how these changes would affect consumers as Singh remarked on the limited options available starting October 16. Nevertheless, he reassured customers that other payment options remain, ensuring some level of convenience despite the restrictions imposed on UPI transactions.

New MDR Framework Implemented By NPCI

The National Payments Corporation of India (NPCI) recently introduced a revised MDR framework, effective from September 15. Under this framework, UPI transactions exceeding Rs 2,000 will attract a charge of 0.4 per cent, while users can continue to conduct transactions at no cost. According to government sources, around 96 per cent of Person-to-Merchant (P2M) transactions will remain unaffected by this charge.

The framework aims to distribute the MDR charges among various participants in the payments ecosystem, including banks and payment application providers. As part of the new rules, an MDR of 0.4 per cent will apply specifically to P2M UPI transactions over Rs 2,000, with the charge capped at Rs 300 per transaction.

This change in payment processing standards has sparked widespread discussions within the industry, as merchants evaluate their ability to adapt to new financial burdens. The Madhya Pradesh Petroleum Dealers Association’s response reflects the ongoing dialogue about equitable cost-sharing practices in the rapidly evolving payments landscape.

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