Petrol dealers say the charge could further squeeze margins already estimated at ₹2.40–₹3.40 a litre, while oil companies—not retailers—control petrol and diesel prices.
BY PC Bureau
September 17, 2026: Petrol pump dealers in several states are threatening to stop accepting large UPI payments in protest against a new ₹5 charge on fuel transactions of ₹2,000 and above.
Retailers in Delhi-NCR, Punjab, Uttar Pradesh, Maharashtra, Karnataka and Rajasthan say the proposed merchant discount rate (MDR) could further squeeze margins that are already estimated at around ₹2.40–₹3.40 per litre.
Monty Sehgal of the Federation of All India Petroleum Traders said dealers could refuse UPI payments above ₹2,000 if the charge is not withdrawn or modified.
The dispute follows a clarification from the National Payments Corporation of India (NPCI) that fuel transactions above ₹2,000 through UPI will attract a flat ₹5 MDR, while transactions below that threshold will continue to remain free for merchants.
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Petroleum dealers argue that they have little room to absorb the additional cost. The Karnataka petroleum traders’ association has sought an exemption, pointing out that dealers cannot simply increase pump prices to recover digital-payment charges because petrol and diesel prices are determined by oil marketing companies.
The issue could affect a substantial volume of fuel purchases. Uttar Pradesh dealer Hemant Sirohi cited official UPI data showing around 23.9 million fuel transactions worth ₹1,573 crore. He estimated that roughly 20% of those transactions exceed ₹2,000, putting the additional cost for an individual petrol pump at around ₹230–₹250 a day.
The All India Petroleum Dealers Association has also urged the government to remove MDR on fuel-station transactions, arguing that petrol and diesel are essential commodities and that payments above ₹2,000 are common at fuel stations.
Thank you @FinMinIndia for hearing dealer representations & capping UPI MDR at a flat ₹5 only on transactions above ₹2,000.
Earlier, card MDR was absorbed by OMCs. The same principle must apply now.
Margins remain unrevised since 2017. Dealer networks are already bleeding under… https://t.co/9KEYWu0UvJ pic.twitter.com/UYOuGp8WcT— Hemant Sirohi (@HemantSirohi1) September 16, 2026
India had 1,03,023 petrol pumps as of April 2026, with more than 90% operated by Indian Oil, Bharat Petroleum and Hindustan Petroleum.
The dispute could also create inconvenience for consumers if dealers begin limiting UPI payments. BimaPay CEO Hanut Mehta said passing digital-payment costs on to customers could undermine confidence in UPI, particularly among price-sensitive consumers.
For dealers, the issue is less about the ₹5 charge itself than about who should bear the cost of digital payments in a business where retail margins are tightly controlled. For consumers, the immediate concern is whether a payment method that has become routine at petrol pumps could face new restrictions.
