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No extra charge for card use at petrol pumps

The oil marketing companies will now meet the banks to decide on who will bear the brunt of these additional charges.   | Photo Credit: M.A. Sriram

Oil Minister Dharmendra Pradhan told reporters on Monday that neither the customers nor the dealers will bear the additional charge on digital transactions made at petrol pumps.

This statement comes a day after petrol pump associations threatened to stop accepting card transactions due to the extra charge levied on them by banks.

The oil marketing companies will now meet the banks to decide on who will bear the brunt of these additional charges.

“Now petrol pumps will accept card payment at least until the meeting happens and they decide who will take on the expense of the additional charge,” an official at Hindustan Petroleum Corporation told The Hindu.

He said the meeting would take place “in the next few days or so.”

‘A big burden’

“It is quite a big burden for the dealers,” K. Ravichandran, Senior Vice-President and Co-Head, Corporate Sector Rating at ICRA said.

At the moment the charges are one per cent on all credit card transactions and 0.25-1 per cent on all debit card transactions.

The Central government had in November instructed the banks to waive all such charges till December 31 to ease the adoption of electronic payment mechanisms for fulfilling its cashless economy objectives.

“Neither the customers nor petrol pump dealers will bear additional charges on digital transactions at petrol stations,” Mr. Pradhan told reporters on Monday.

“The Government had issued guidelines in February 2016 stating that the Merchant Discount Rate (MDR) charge will not be passed on to the consumers and that the stakeholders will take appropriate steps to absorb the MDR charges,” said Mr. Pradhan.

Mr. Ravichandran of ICRA said: “As such, the dealer margin is very low. They are complaining it’s one of the lowest in the world. It’s the same for the oil marketing companies as well. So, even bearing one per cent would be a challenge.”

The All India Petroleum Dealers Association on Sunday announced that petrol pumps across the country would not accept credit or debit cards in protest of the MDR, the burden of which was placed entirely on the dealers. They later deferred this move till January 13 after the transaction fees were waived till that date.

“Banks have also been co-ordinating with oil companies to set up card accepting terminals at outlets wherever required,” Rajiv Anand, ED – Retail Banking at Axis Bank said. “We look forward to working closely with the oil industry to ensure that the momentum built for digital transactions can be carried forward and that customers are not inconvenienced by bearing the cost of the transaction.”

“Now petrol pumps will accept card payment at least until the meeting happens and they decide who will take on the expense of the additional charge,” an official at Hindustan Petroleum Corporation told The Hindu, adding that the meeting would take place “in the next few days or so”.


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Printable version | Dec 1, 2021 1:19:32 AM | https://www.thehindu.com/news/national/no-extra-charge-for-card-use-at-petrol-pumps/article17012896.ece

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