Madhya Pradesh Fuel Pumps' Move To Stop Accepting UPI Payments Above ₹2k From Oct 16 Serious Concern: CAIT

The decision by fuel pump dealers in Madhya Pradesh to stop accepting UPI payments of more than ₹2,000 for petrol and diesel purchases from October 16 is a serious concern for digital transactions, the Confederation of All India Traders said on Friday.

CAIT Bhopal district president and Madhya Pradesh media in-charge Dharmendra Sharma said around 4,700 petrol pumps in the state would be affected by the decision, which he linked to the proposed imposition of Merchant Discount Rate (MDR) on Unified Payments Interface transactions.

UPI had been promoted for years as a key pillar of Digital India, a cashless economy and transparent business, but merchants were now concerned over the proposed MDR, he said.

He said a 0.4% MDR had been proposed on eligible UPI merchant transactions above ₹2,000, which would mean a cost of ₹40 on a payment of ₹10,000, while for fuel transactions, a flat MDR of ₹5 on transactions above ₹2,000 had been reported.

MP Petrol Pumps Dealers Association president Ajay Singh told PTI that if the government does not roll back the MDR, the organisation's members have decided not to accept UPI payment over ₹2000 at their fuel stations from October 16.

"With the new system, a petrol pump has to bear a loss of ₹17,700 monthly. There are 4,700 fuel stations in MP. Our margin is less so we can't bear this extra expenditure," he added.

CAIT's Sharma said imposing charges after encouraging merchants and consumers to adopt digital payments could affect the pace of the digital and cashless economy.

"This is not merely a matter of a few rupees in cost, but a question of the direction of policy," Sharma pointed out.

CAIT has urged the Union government to reconsider the decision and keep business transactions, including those involving petrol and diesel, exempt from MDR, he said.

"Traders are already operating amid costs, competition and limited margins. An additional cost on digital payments could affect their profits and eventually discourage the use of such payments," the CAIT office-bearer asserted.

India's UPI model had become an example of digital payments globally and it is a matter of concern if circumstances forced restrictions on its use, he said.

The government should understand the practical difficulties faced by traders and reconsider the decision immediately, Sharma said.