Petrol pump dealers across India have raised concerns over the new Merchant Discount Rate (MDR) framework for UPI transactions and warned that they may stop accepting UPI payments above ₹2,000 from October 15, 2026.
Under the new framework, UPI payments to fuel merchants above ₹2,000 will attract a flat MDR of ₹5 per transaction. The charge is applicable within the merchant payment ecosystem and is not meant to be paid separately by consumers. UPI payments of up to ₹2,000 at merchants will remain free of MDR.
Editorial Insight
Key Highlights
Important points readers should notice.
New UPI MDR framework takes effect from October 15, 2026.
Fuel payments above ₹2,000 will attract a flat ₹5 MDR.
Customers are not supposed to pay the MDR separately.
Petrol pump dealers are seeking exemption from the charge.
Dealers have warned they may stop accepting UPI payments above ₹2,000.
Petrol pump dealer associations have sought an exemption from the MDR, arguing that the additional payment-processing cost could put pressure on their already limited margins. Some dealers have warned that they could shift to cash payments for transactions above ₹2,000 if the exemption is not granted.
The government has clarified that MDR is not a tax or a charge collected by the government or NPCI. It is distributed among participants in the UPI payment ecosystem. Banks have also been advised to ensure that MDR costs are not passed on to customers.
Editorial Analysis
Why This Matters
The proposed change could affect how consumers make high-value fuel payments if petrol pump dealers proceed with their warning to restrict UPI acceptance above ₹2,000.
