A fuel dispenser nozzle. File photograph.
Bengaluru: The Namma IndianOil Petroleum Dealers Association has asked IndianOil to clarify whether it will absorb or reimburse merchant charges on UPI payments at its retail outlets, warning that an additional payment-processing cost could erode dealers’ margins.
In a letter to IndianOil’s Karnataka retail sales head, the Greater Bengaluru association requested an early written clarification on the arrangement for charges due to take effect from October 15.
The Department of Financial Services’ September 15 FAQ specifies a flat ₹5 merchant discount rate for fuel payments above ₹2,000 from October 15, 2026. Payments up to ₹2,000 remain outside the charge, and merchants cannot pass the MDR on to customers. The association’s letter refers to “₹2,000 and above”; the official FAQ places the threshold above ₹2,000. Department of Financial Services FAQ
NIPDA said dealers’ margins were fixed by oil marketing companies and that they could not independently raise the retail selling price of petrol or diesel to recover the expense. A substantial share of outlet sales was now paid through UPI, it said.
The association estimated that, depending on sales volume and the share of digital payments, the additional monthly burden could range from about ₹40,000 to ₹1.5 lakh or more for an outlet. This is the association’s estimate; the letter does not provide the transaction data or calculation behind it.
Dealers could not practically refuse higher-value UPI payments because customers preferred digital payments, NIPDA said. Moving towards cash would bring bank cash-handling charges and additional operational and security concerns, it added.
The association sought clarity on whether IndianOil would fully absorb or reimburse MDR and on the accounting and settlement mechanism to prevent deductions from dealers’ receivables or working capital.
It also asked whether the company had taken up the issue with the petroleum and finance ministries, NPCI, banks and payment-service providers. A copy of the letter was addressed to IndianOil’s Bengaluru divisional head.
About the Author
