UPI MDR Relief On The Cards, Will Petrol Pump Payments Get An Exemption?
· Free Press Journal
New Delhi: The government is reviewing a proposal to provide relief from Merchant Discount Rate (MDR) on select UPI transactions after businesses sought exemptions under the new payment framework.
Petrol pump dealers are among those seeking relief. However, no final decision has yet been taken on exempting UPI payments at fuel stations from MDR.
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What Have Petrol Pump Dealers Demanded?
According to CNBC, petrol pump dealers' associations have sought removal of MDR on fuel payments. The demand has been forwarded to the Finance Ministry through the Petroleum Ministry for consideration.
If accepted, the move could change how MDR applies to UPI transactions at petrol pumps after the new framework takes effect.
What Changes Under New UPI MDR Framework?
Under the new framework, UPI payments exceeding Rs 2,000 at petrol pumps will attract a flat MDR of Rs 5 per transaction. Payments of up to Rs 2,000 for fuel will remain outside the MDR net.
The new framework is expected to come into effect from October 15, 2026.
Importantly, customers making UPI payments will not be separately charged MDR. The fee operates within the payments ecosystem rather than being directly levied on customers.
Which Transactions Remain Free?
Person-to-person (P2P) and eligible person-to-merchant (P2M) UPI transactions of up to Rs 2,000 will remain outside MDR.
Zero MDR will also continue for small merchants covered under the P2PM framework. This category includes eligible small sellers receiving UPI QR payments of up to Rs 1 lakh per month.
Where Will MDR Apply?
Certain categories, including fuel, railways, telecom and insurance, will attract a flat MDR of Rs 5 for UPI payments exceeding Rs 2,000.
For other eligible P2M UPI transactions above Rs 2,000, an MDR of 0.4 percent will apply.
The MDR will, however, be capped at Rs 300 per transaction. This means payments of Rs 75,000 or more will not attract MDR beyond the Rs 300 ceiling.
Any exemption for petrol pumps will depend on the government's final decision on the industry's request.