Bhopal: The proposed merchant discount rate (MDR) charge on UPI transactions of over Rs 2000 has drawn a chorus of disapproval from different businesses. And it seems to be growing with every passing day.
On Saturday, the Madhya Pradesh Petrol Pump Association announced after a meeting that October 15 onwards, petrol pumps across the state will not accept UPI transactions above Rs 2,000, citing losses due to the recently-announced MDR.
The association, which represents 4,700 dealers in MP, said sealers will accept only cash for payments above Rs 2,000, refusing to bear the 0.4% MDR introduced by the Centre.
Association president Ajay Singh said, “Petroleum dealers across the state are opposing the central government’s new policy. A significant portion of fuel sales happens via UPI, and our fixed profit margins will be hit by this duty.”
The association stated that dealers were already paying MDR on credit card transactions. “Now, imposing this duty on UPI will only create further financial loss for us,” the statement said.
Mumbai petrol dealers also sound warning
In Mumbai, the Petrol Dealers’ Association has written to the Reserve Bank of India (RBI) requesting a complete exemption for fuel retailers from the proposed UPI MDR charges.
The Mumbai association also warned that dealers won’t accept UPI payments at fuel stations across the city from October 15, if MDR charges are imposed on UPI transactions above Rs 2,000.
In the September 16 letter sent to the RBI Governor and Chief General Manager of its Department of Payment and Settlement Systems, Mumbai Petrol Dealers’ Association president Chetan Modi stated that the proposed charges could put financial pressure on motor fuel retailers.
The letter pointed out that fuel dealers have been operating with largely unchanged margins since 2017 while facing rising real estate costs, compliance expenses and labour costs in Mumbai.
Under such circumstances, its member fuel retailers are not in a position to pass on UPI MDR transaction charges on to their customers because fuel prices are regulated, and dealers are not permitted to levy additional charges.
Hence, fuel dealers will have to absorb the cost of UPI transactions, especially since many fuel purchases exceed the Rs 2,000 limit, the Mumbai association said.
If the UPI MDR charges are not waived, the Mumbai dealers may be left with no other option except to take a collective decision to discontinue UPI payments at fuel pumps across Mumbai from October 15.
Ghaziabad traders put up notices
In Ghaziabad, traders have started putting up notices outside their shops saying ‘UPI Payment Will Not Be Accepted’.
They are saying that although the government has said MDR charges on transactions above Rs 2,000 will be charged to merchants, the additional cost could eventually affect customers.
Hence, traders are advising customers to carry cash when making purchases from October 15, particularly for transactions above Rs 2,000.
