New Delhi, September 17, 2026 (Yes Punjab News)
Representatives of the All India Petroleum Dealers Association (AIPDA) met senior officials of the Ministry of Petroleum and Natural Gas on Thursday to press for exemption from the merchant discount rate (MDR) on UPI transactions for fuel purchases at petrol pumps.
The dealers’ association said the additional MDR cost could put pressure on dealer margins, as retail fuel sales are conducted on prescribed commissions.
Under the new UPI framework, transactions of more than Rs 2,000 for petrol and diesel purchases attract a flat MDR of Rs 5 per transaction. According to petroleum dealers, such transactions account for around 30-40 per cent of total purchases across retail outlets in the country.
During the meeting, Petroleum Ministry officials explained the rationale for introducing the MDR, saying the charge was required to support development of the next layer of India’s UPI digital infrastructure.
“Petroleum dealers have been at the forefront of adopting digital payments and have worked closely with the government to promote their use across the country,” AIPDA said in a statement.
The association said digital payments have become an important mode of payment at petrol pumps, particularly for higher-value fuel purchases. It has sought a complete exemption for fuel retail transactions, citing the nature of the business and the impact of MDR-related costs on already narrow dealer margins.
AIPDA said it would continue discussions with the government to find a solution acceptable to consumers, petroleum dealers and other stakeholders in the UPI ecosystem.
The Finance Ministry has clarified that MDR is neither a tax nor a charge collected by the government or the National Payments Corporation of India (NPCI). Instead, it is distributed among participants in the payment ecosystem, including banks and payment application providers, to support the operation and continued expansion of UPI.
Transactions above Rs 2,000 in essential and thin-margin sectors, including railways, telecommunications, insurance, fuel and agricultural inputs, will attract a flat MDR of Rs 5 per transaction. The government has said the flat charge is intended to provide cost certainty for critical public services and businesses operating on narrow margins.
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