Archive · 17 Sep 2026
Petroleum Dealers Seek UPI MDR Exemption on Fuel Sales
Petrol pump owners want a special rule for digital payments.
They do not want to pay a ₹5 fee on large UPI fuel purchases.
This fee applies when a petrol or diesel purchase is above ₹2,000.
Dealers say many purchases are this large and that their profits are already limited.
Fuel prices are regulated, so dealers cannot easily raise prices to recover the cost.
The Petroleum Ministry says the fee helps pay for and expand India’s digital payment system.
The Finance Ministry says the fee is not a tax and is shared among banks and payment companies.
The dealers and government will continue talking about a solution.
The All India Petroleum Dealers Association asked for a complete exemption from MDR on UPI fuel payments.
A flat ₹5 MDR applies to petrol and diesel transactions above ₹2,000 under the new UPI framework.
Dealers say transactions above ₹2,000 represent about 30–40% of purchases at retail outlets nationwide.
Dealers argue prescribed commissions and regulated fuel prices leave them little room to absorb added payment costs.
The Petroleum Ministry says MDR supports UPI infrastructure, while discussions with dealers are expected to continue.
- Who
- The All India Petroleum Dealers Association and officials from the Ministry of Petroleum and Natural Gas.
- What
- Dealers are seeking a complete exemption from the merchant discount rate on UPI petrol and diesel purchases.
- When
- The representatives met ministry officials on Thursday; the articles do not specify the date.
- Where
- At petrol pumps and retail outlets across India; the meeting took place in New Delhi.
- Why
- Dealers say the ₹5 charge on transactions above ₹2,000 could reduce their margins, while officials say it supports UPI infrastructure.
Petroleum Dealers
Government and Payment Ecosystem
Whether fuel should pay MDR
Petroleum Dealers
Dealers want a complete exemption because the charge could squeeze margins in a regulated, low-margin business.
Government and Payment Ecosystem
Ministry officials say MDR is needed to support the development and expansion of India’s UPI digital infrastructure.
Who should bear the cost
Petroleum Dealers
Dealers say they cannot independently raise fuel prices or easily pass the charge on to customers.
Government and Payment Ecosystem
The Finance Ministry says MDR is distributed among payment ecosystem participants rather than collected as a government or National Payments Corporation of India charge.
Effect of digital payments
Petroleum Dealers
Dealers say digital payments, especially for higher-value purchases, are important and that they have supported their adoption for years.
Government and Payment Ecosystem
The new framework applies a predictable flat fee in essential and thin-margin sectors to help fund payment-system operations.
- MDR amount
- ₹5 per transaction
- Payment threshold
- Petrol and diesel purchases above ₹2,000
- Estimated affected purchases
- About 30–40% of purchases across retail outlets, according to dealers
- Dealers’ demand
- A complete MDR exemption for fuel retail transactions
- Reason cited by dealers
- Fuel is sold at regulated prices and dealers earn prescribed commissions
- MDR recipients
- Banks, payment service providers and UPI application companies
- Other affected sectors
- Railways, telecommunications, insurance and agricultural inputs
