The All India Petroleum Dealers Association has requested the Indian government to waive Merchant Discount Rate charges for UPI transactions exceeding ₹2,000 to protect dealer margins.
Reader brief
Through the Reader lens: The All India Petroleum Dealers Association (AIPDA) has formally requested the Indian government to waive the Merchant Discount Rate (MDR) on UPI transactions exceeding ₹2,000. This lobbying effort stems from fuel retailers' concerns that the newly implemented flat MDR structure erodes their already razor-thin profit margins on high-value digital payments. While the coverage highlights the dealers' urgent plea for a sector-specific exemption, it remains unclear whether regulators will accommodate the request without disrupting the broader economics of the UPI ecosystem. The situation underscores the growing friction between the push for digital payments and the financial viability of traditional retail fuel stations. Stakeholders are now awaiting a formal response from the government or the National Payments Corporation of India regarding a potential exemption.
What to watch next
- Watch for government or NPCI response on MDR exemption.
- Monitor fuel retailer profit margins in upcoming earnings.
- Track UPI transaction volumes for values above ₹2,000.
What was said5
Attributed, verbatim. Every quote is checked against the article it came from. One that does not match is not shown.
All India Petroleum Dealers Association
2 quotes“Dealer margins are determined by the Oil Marketing Companies (OMCs) under the guidance of the Ministry of Petroleum and Natural Gas and are primarily fixed on a per-litre basis, rather than as a percentage of the transaction value. Dealers therefore have no mechanism to increase their earnings in proportion to the value of a transaction”
In the article
…pump owners have repeatedly engaged with oil marketing companies to resolve the matter, these negotiations have yielded no results, leaving operators with increasingly razor-thin profit margins. " Dealer margins are determined by the Oil Marketing Companies (OMCs) under the guidance of the Ministry of Petroleum and Natural Gas and are primarily fixed on a per-litre basis, rather than as a percentage of the transaction value. Dealers therefore have no mechanism to increase their earnings in proportion to the value of a transaction ," the association said in the letter. "Even a seemingly modest fixed charge of ₹5 per UPI transaction above ₹2,000 would have a substantial cumulative impact. Petrol pumps process a very large number of transactions…
“Even a seemingly modest fixed charge of ₹5 per UPI transaction above ₹2,000 would have a substantial cumulative impact. Petrol pumps process a very large number of transactions every day, and the multiplication of even a small charge across thousands of transactions would create a significant recurring financial burden.”
In the article
…a per-litre basis, rather than as a percentage of the transaction value. Dealers therefore have no mechanism to increase their earnings in proportion to the value of a transaction," the association said in the letter. " Even a seemingly modest fixed charge of ₹5 per UPI transaction above ₹2,000 would have a substantial cumulative impact. Petrol pumps process a very large number of transactions every day, and the multiplication of even a small charge across thousands of transactions would create a significant recurring financial burden. A percentage-based MDR of up to 0.4% would be even more disproportionate to the economics of petroleum retailing," the letter added. Fuel retailers argued that the payment channel a customer uses does not change the…
Monty Sehgal
1 quote“We may have to stop accepting UPI payments of ₹2,000 and above if exemption is not allowed to fuel retailers. With wafer-thin margins, not revised in line with inflation since 2017, it is very difficult for petrol dealers to incur any such charges.”
In the article
…already operate on thin margins and will be forced to stop accepting UPI payments of ₹2,000 and above. Monty Sehgal, National Spokesperson for the Federation of All India Petroleum Traders (FAIPT), told businessline: “ We may have to stop accepting UPI payments of ₹2,000 and above if exemption is not allowed to fuel retailers. With wafer-thin margins, not revised in line with inflation since 2017, it is very difficult for petrol dealers to incur any such charges. ” A nominal hike in margins took place in 2024 but was inadequate to meet fixed establishment costs, Sehgal added. Hemant Sirohi, Member of Empower Petroleum Dealers Foundation (EPDF), said: “I am thankful to the…
Hemant Sirohi
1 quote“In the past, the MDR of credit and debit cards was being absorbed by the OMCs. A similar arrangement can be made or the dealer margin should be increased adequately to absorb the MDR cost.”
In the article
…fixed establishment costs, Sehgal added. Hemant Sirohi, Member of Empower Petroleum Dealers Foundation (EPDF), said: “I am thankful to the government that it has capped the MDR at a flat rate of ₹5 per transaction. In the past, the MDR of credit and debit cards was being absorbed by the OMCs. A similar arrangement can be made or the dealer margin should be increased adequately to absorb the MDR cost. ” Sirohi said that transactions above ₹2,000 are around 20 per cent of the cumulative transactions at retail outlets (ROs). As per National Payments Corporation of India’s (NPCI) June 2026 numbers, there are roughly…
K M Basavegowda
1 quote“AKFPT respectfully submits that the same principle needs to be applied to any proposed UPI MDR framework in 2026 as there is no justification for departing from the protection afforded to petroleum dealers under the 2016-17 arrangement”
In the article
…the government in promoting cashless and digital transactions. The government had exempted the RO dealers from MDR charges, which was absorbed by the OMCs. “This constitutes a clear and important policy precedent. AKFPT respectfully submits that the same principle needs to be applied to any proposed UPI MDR framework in 2026 as there is no justification for departing from the protection afforded to petroleum dealers under the 2016-17 arrangement ,” he urged. Published on September 16, 2026…
Related coverage
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So what2
Who is affected first and what likely follows, with a direction and a horizon. Extracted from the reports, never invented.
- Fuel retailers margin pressure· immediate
- Indian Government / NPCI policy review pressure· weeks
Sources2
- [1]The Hindu BusinessLineneutralFuel retailers urge Govt to exempt MDR charges
- [2]MintcriticalUPI transaction charges: Petrol pump dealers seek full MDR exemption on payments above ₹2,000