Petrol Pumps Agree to Accept Cards After Govt Lifts Surcharge

Petroleum dealers had earlier said that they would not accept plastic money from Monday.

Petroleum dealers had earlier said that they would not accept plastic money. (Photo: iStock)

The All India Petroleum Dealers Association (AIPDA) on Thursday said that they will continue to accept credit/debit cards after the 13 January deadline set by them earlier in the week.

In a press statement, the AIPDA said that the decision was taken after they received assurances from the Centre and Oil Marketing Companies that the 1% MDR will not be borne by the petroleum dealers.

(Photo: The Quint)

On Monday, wading into the tussle between banks and petrol pumps, the government said that neither the customers nor the petrol pump dealers will pay transaction costs for card payments.

The Petrol Pumps Association on Sunday had deferred its decision to not accept card payment for fuel purchases till 13 January. Petrol pumps maintained that they would continue to accept payments through e-Wallets such as Paytm. The turnaround came after the government stepped in.

Earlier in the day, petroleum dealers across the country had said that they will not accept plastic money starting Monday, in protest against a one percent levy plus taxes on all transactions made through debit and credit card.

In view of the debit of Merchant Discount Rate (MDR) of one percent, it has been decided to stop accepting payment through Credit/Debit Cards from 9 January 2017.

Ajay Bansal, President, All India Petroleum Dealers Association to <i>The Indian Express</i>

The move came after the government assured the dealers that the extra fee won’t be charged till 13 January.

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The petroleum dealers' association had written to Union finance minister Arun Jaitley, protesting against the sudden decision by the banks to levy the transaction charge and their resolution to refuse card payments, after which the government decided to step in.

In their letter to Mr Jaitley, the association said since there has been no word of passing the charge to consumers, the dealers will sustain a loss.

Commenting on the issue, Petroleum Minister Dharmendra Pradhan said that negotiations are going on between banks and oil company owners. He also said that no surcharge will be imposed on customers or the petrol pump owners.

Pradhan also added:

Petrol pump owners have to follow government’s decision, there is no question about it. The issue will be resolved very soon.

On the other hand, reacting to the diktat by the Petrol Pump Association, ICICI bank decided to not charge transaction fee starting from Monday.

Proposed Levy Erodes into Profit Margins

Justifying not accepting card payments, petrol pump associations argued that this levy erodes into their margins which are volume based.

The move came at a time when the country is facing a severe cash crunch and Centre is pushing hard for increased cashless transactions. Interestingly, the government had announced a 0.75 percent cashback offer on purchase of petrol using plastic money.

The move came at a time when the country is facing a severe cash crunch. (Photo: iStockphoto)

Reacting to the development, the Tamil Nadu Petroleum Dealers Association said:

We have suddenly received intimation from the bankers, reneging on their existing agreements with us, and for having decided to levy a Merchant Discount Rate (MDR) of one percent plus taxes on all transactions done at our outlets.

Protesting the move, KP Murali, President of the Tamil Nadu Petroleum Association, said their margins were fixed on a per kilolitre (KL) basis and that they did not have scope to absorb these charges.

He added:

We have specific mechanisms to compute the margin and these do not have any scope for Credit/Debit card MDR. This will lead to financial losses for the dealers.

Further, bankers were also "delaying payments" and not settling the entire dues, he alleged.

(With inputs from ANI, The Indian Express, PTI)