Petrol pump dealers in Madhya Pradesh have officially announced they will stop accepting UPI payments above ₹2,000 from October 16, 2026, citing the proposed 0.4% Merchant Discount Rate (MDR) on high-value merchant transactions. According to The Times of India, Ajay Singh, president of the Madhya Pradesh Petroleum Dealers Association, confirmed that dealers would not be able to absorb the additional cost due to their narrow profit margins. The association has written to its State-Level Coordinator (SLC) regarding the government's decision on the proposed MDR charge, with Singh stating "We have written a letter to our State-Level Coordinator (SLC) regarding the government's decision that an MDR charge of 0.4% will be levied on UPI transactions above ₹2,000 from October 16." Meanwhile, petrol dealers in Mumbai, Thane, Raigad and Palghar have opposed the new UPI MDR charges and urged the Reserve Bank of India to provide a complete exemption for fuel retailers. The Mumbai, Thane, Raigad and Palghar Petrol Dealers Association has warned that if the issue is not resolved, dealers could collectively discontinue UPI payment facilities across petrol pumps in Mumbai from October 15. The association represents dealers operating across the region, including members associated with Indian Oil Corporation Ltd (IOCL), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL), among others.
The proposed MDR framework will significantly impact petrol pump operations, with Singh estimating that around 100 customers at each petrol pump make transactions above ₹2,000. As per The Times of India, this translates to a loss of around ₹590 per day, which comes to approximately ₹17,700 per month for individual dealers. The National Payments Corporation of India (NPCI) introduced the new framework on September 15, under which UPI merchant transactions above ₹2,000 will attract an MDR of 0.4%, with the MDR capped at ₹300 per transaction. However, fuel payments have a separate flat-rate provision, with UPI payments for fuel purchases above ₹2,000 at petrol stations will attract a fixed MDR of ₹5 per transaction, while transactions up to ₹2,000 will continue to have zero MDR. According to the Mumbai, Thane, Raigad and Palghar Petrol Dealers Association, a typical petrol pump handles around 500 transactions a day, with approximately 80% of payments made through digital modes. Of the total transactions, around 60% are made through UPI, while credit cards and other digital payment methods account for the remaining digital transactions. In cities such as Mumbai, around 40% of UPI transactions at petrol pumps are above ₹2,000, while the proportion is even higher on highways, where around 60% of UPI transactions are above ₹2,000. The association president emphasized that fuel retailers operate on narrow profit margins of only around 0.5%, making it impossible to bear any additional expense.
The National Payments Corporation of India (NPCI) has introduced a comprehensive new MDR framework effective September 15, 2026, with specific provisions for fuel retailers. According to The Times of India, the government has said that around 96% of P2M UPI transactions will remain unaffected under the new framework, while fuel payments have the separate flat-rate provision. The MDR is a charge on the merchant and is not directly payable by the customer, with UPI payments continuing to be free of charge for customers. The framework applies to selected Person-to-Merchant (P2M) UPI transactions above ₹2,000, with the MDR capped at ₹300 per transaction for most categories. For customers, UPI payments will continue to be free of charge, while merchants and participants in the payment ecosystem will bear the applicable MDR.
Parliamentary Standing Committee on Finance chairman Bhartruhari Mahtab has defended the committee's unanimous report on the Demands for Grants amid controversy over MDR recommendations. According to The Times of India, Mahtab stated that "The Parliamentary Standing Committee has a process of adoption of report after due discussion relating to the Demands for Grants. Questions were sent to the department; they gave written answers. On the basis of that, a draft report was prepared, circulated and subsequently adopted in the committee. I believe it was a unanimous report that was submitted to Parliament. Everything is on record." His remarks came after Congress MP Manish Tewari rejected claims that Opposition members supported the proposal to introduce MDR on digital payments. Tewari specifically claimed that "The current proposal to levy a Transaction fee or MDR on UPI and other digital payments never came before the committee thereafter." The committee's report explored a possible revenue model for digital payments, with the government currently exploring options for restoring MDR on certain transactions.
The Madhya Pradesh Petroleum Dealers Association has requested the government to extend existing MDR exemptions to UPI transactions, citing the specific circumstances under which fuel retailers previously received exemptions for card payments. As per The Times of India, Singh stated "Now it is up to the government. We have already been given an exemption from MDR charges on credit and debit card transactions. So, we request the government to extend the same exemption to UPI as well, considering the special circumstances under which petrol pumps were granted an exemption on credit and debit card transactions." The association president noted that "It is for the public to decide what the government is doing with them. We have no choice, so we will not accept UPI payments above ₹2,000." Meanwhile, the Mumbai, Thane, Raigad and Palghar Petrol Dealers Association has sought a complete exemption from UPI MDR charges for fuel retailers and urged the Reserve Bank of India to intervene to prevent any disruption to fuel retail operations. The association argued that imposing MDR on UPI transactions would create an additional cost for dealers without providing them the ability to recover it through fuel prices, as petrol and diesel prices are regulated.
Despite the UPI restrictions, customers can continue to use debit and credit cards for fuel purchases without any such limit. As per The Times of India, Singh stated that "for the convenience of customers, we have kept both debit and credit card facilities available." The association president noted that "If customers use credit or debit cards from October 16, we have no problem and they can use them without any limit. But we will not accept UPI payments above ₹2,000." This decision focuses on high-value UPI payments while maintaining other payment options for customer convenience, with the UPI itself being an instant payment system operated by the National Payments Corporation of India (NPCI) allowing users to transfer money between bank accounts and make merchant payments. According to the Mumbai, Thane, Raigad and Palghar Petrol Dealers Association, cash payments account for around 20% of transactions, while cashless payments through digital modes account for approximately 80% of total transactions.
