Petrol pumps defer decision to not accept card payments till Jan 13


Banks decided to defer charging fuel retailers a transaction fee till January 13, after petrol pumps across the nation threatened to stop accepting credit and debit cards from Monday in protest against a levy of 1% on card payments.

The banks didn’t reverse their decision to charge the fee, also known as the merchant discount rate, but postponed it after the government intervened on Sunday.

In a letter to the finance and petroleum ministries, the All India Petroleum Dealers Association (AIPDA) said: “HDFC and other banks have informed us that they will charge 1% on all credit card transactions and 0.25% to 1% on all debit card transactions from January 9.”

The letter says the banks’ decision is based on a Reserve Bank of India (RBI) circular on December 16 last year. The RBI circular apparently does not mention recovering these charges from customers.


“The same will be debited to petroleum dealers’ account and net transaction value will be credited to our account … This will lead to financial losses for the dealers,” AIPDA president Ajay Bansal wrote.

There are about 56,200 petrol pumps in India, including those of private companies such as RIL and Essar.

A source in the petroleum ministry said they were aware of the issue.

“We are trying to negotiate with the banks so that they postpone levying the transaction fee. On Monday, all parties can discuss and resolve the issue,” the source said.

The petroleum dealers’ threat could put paid to government’s push for plastic money after it recalled 500- and 1,000-rupee notes in November, wiping out 86% of the cash in circulation.

The cash crunch from the demonetisation drive triggered long queues at banks and ATMs. The latest decision of petrol pumps would mount more pressure on the government to dispense banknotes.

Before the shock recall of two high-value notes, customers paid a transaction fee along with a surcharge for buying fuel with debit or credit cards.

But for promoting cashless payments, customers were exempted from paying these charges at petrol pumps. The banks bore the burden.

“We were not given any date for discontinuing this by the government. The unsaid understanding was that these levies would start after the first week of January,” said a banker, who didn’t wish to be named.

Not all banks have decided to charge the transaction fee. Several banks have apparently assured the government they will wait for its decision before charging fuel retailers the fee.

State-run oil companies such as Indian Oil, Hindustan Petroleum and Bharat Petroleum that operate petrol pumps have asked banks for more time.

“This issue can be resolved through discussions. But for that, banks have to defer the decision for a few days,” a source said.

After the notes ban, state-run petrol pumps have offered a cash-back on card transactions, a promotion for which they are bearing the cost. That was done to promote cashless payments.

Sources said the companies want clarity from the government about the end-date of this promotional offer.

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