Mumbai Petrol Pumps May Stop UPI Payments From October 15 Over MDR Charges
Mumbai petrol dealers have warned they may stop accepting UPI payments from October 15 over the revised Merchant Discount Rate (MDR). The Petrol Dealers Association has sought a complete exemption from the RBI and Finance Ministry, saying rising costs and tight margins make the charge difficult to absorb as more than 60% of fuel transactions are digital.
Petrol pumps across Mumbai may stop accepting UPI payments from October 15 if fuel retailers are not exempted from the revised Merchant Discount Rate (MDR) on high-value UPI transactions. The Petrol Dealers Association of Mumbai has approached the Reserve Bank of India (RBI) and the Finance Ministry, seeking a complete exemption and warning that dealers could withdraw UPI facilities if the additional cost is imposed.
The issue follows the introduction of a revised UPI MDR framework that takes effect on October 15, Indian Express reported. While the general MDR for specified person-to-merchant transactions above INR 2,000 is 0.4%, fuel payments fall under a sector-specific flat MDR of INR 5, according to the latest framework. The charge is to be borne by merchants rather than customers. Madhya Pradesh Petrol Pumps To Stop Accepting UPI Payments Above INR 2,000 From October 16 Over MDR Charges.
Dealers Seek Exemption From UPI Charges
The Petrol Dealers Association of Mumbai wrote to the RBI seeking a complete waiver for fuel retailers. In its September 16 letter, association president Chetan Modi said the additional cost would place further pressure on dealers operating with tight margins.
The association said more than 60% of fuel and diesel transactions at its outlets are now conducted digitally. Dealers said they invested in digital-payment infrastructure when UPI transactions operated under a zero-MDR framework. UPI New Rules From October 15: Govt Clarifies MDR, GST and RuPay Charges.
“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.
Why Petrol Dealers Are Concerned
Dealers said their commissions have remained largely unchanged for nearly a decade while real estate, labour, compliance and other operating expenses have increased in Mumbai. They also argue that fuel retailers cannot simply recover the MDR from customers. Fuel prices are regulated, and dealers are not permitted to add a separate transaction charge to the price paid by motorists.
Under the new framework, merchants bear the MDR, while banks and payment service providers cannot pass the charge directly to consumers. For petrol stations, the concern is particularly relevant because fuel purchases frequently exceed INR 2,000, making them more likely to attract the revised charge.
What Changes From October 15
The revised UPI framework introduces a 0.4% MDR for specified person-to-merchant transactions above INR 2,000, subject to a cap of INR 300 for larger transactions. However, several categories, including fuel purchases, are subject to a flat INR 5 MDR rather than the percentage-based rate.
Transactions below INR 2,000 remain outside the new MDR framework. Person-to-person UPI payments also remain free of MDR. The new structure represents a shift from the zero-MDR model that had supported the expansion of UPI-based merchant payments.
Dealers Warn Of UPI Withdrawal
The Petrol Dealers Association has warned that it may take a collective decision to discontinue UPI payments at petrol pumps across Mumbai from October 15 if fuel retailers are not exempted.
Such a move would affect motorists who increasingly use UPI to pay for fuel. The association has therefore sought intervention before the new framework comes into effect.
The warning comes as other merchant groups have also raised concerns about the cost of the revised MDR. A LocalCircles survey cited in recent reports found that 17% of surveyed merchants were willing to bear the 0.4% MDR on UPI transactions above INR 2,000, while more than 41% opposed bearing the charge.
The revised MDR has prompted debate across India's digital-payments ecosystem. Payments industry representatives have argued that merchant fees can help fund the infrastructure, cybersecurity and services required to operate and expand UPI. Retailers and other merchant groups, meanwhile, have raised concerns about additional operating costs and pressure on margins.
For Mumbai's petrol dealers, the immediate issue is whether fuel retailers will receive an exemption before October 15. Until a decision is taken, the association's proposed withdrawal of UPI payments remains a warning rather than a confirmed shutdown.
(The above story first appeared on LatestLY on Sep 19, 2026 04:28 PM IST. For more news and updates on politics, world, sports, entertainment and lifestyle, log on to our website latestly.com).
