In a news that had shocked the Government, commuters and technology enthusiasts – Petrol pumps across the country had announced that they would stop accepting credit and debit card payments from customers over the levy of a merchant charge by banks for accepting card payments from customers.
The All India Petroleum Dealers Association (AIPDA) had sent out a letter to the Finance and Petroleum Ministry sating that since major banks like HDFC had informed them that a 1% charge on all credit card transactions and a 0.25% to 1% charge on all debit card transactions shall be levied on Petrol Pump owners from January 9, they had decided to stop accepting card payments from customers.
The decision taken by the banks is in response to a circular sent by the RBI to all banks on the 16th of December, which does not have any mention of recovering this amount from customers. This would be a huge amount for pump owners, especially after the demonetization of Rs 500 and Rs 1000 notes had resulted in people resorting to card payments. The AIPDA announced that they will hence forth not be accepting card payments.
This would have been a major dent in the efforts of the Government in making India a cashless digital economy. There was a high level meeting held which Petroleum Minister Dharmendra Pradhan held with representatives of banks, dealers and representatives of Public sector petrol retailers. This resulted in banks agreeing to defer this policy by another 4-5 days, but not completely scrapping the policy. Pump owners have argued that the margins that they get are not enough to absorb the new charge being levied.
The Merchant Discount Rate (MDR) has always been a cause of concern for petrol pump owners and till now there was an informal arrangement which kept the pump owners happy, but with the additional charges, the AIPDA has gone up in arms against the banks.
There are about 56,200 petrol pumps in India. This number includes the pumps of private players like Reliance and Essar.