Petrol pumps across the country have decided to stop accepting credit and debit card payments for fuel purchase from Monday to protest against the 1 percent transaction fee that banks have decided to impose on pump owners instead of customers.
The move could seriously hamper the government’s plan to encourage cashless transactions and cause major inconvenience to motorists in the midst of the ongoing cash crunch.
Earlier, in a bid to promote cashless transactions, the government had waived the Merchant Discount Rate (MDR) on fuel purchase post demonetisation for consumers for the first 50 days.
Now that the period is over, the banks have decided to levy MDR on petrol pump owners.
Petrol pump owners association said they have been “informed by HDFC Bank that we will be charged 1 percent on all credit card transactions and between 0.25 per cent and 1 per cent on all debit card transactions from January 9, 2017. The same will be debited to our account and net transaction value will be credited to our account”.
Ajay Bansal, President, All India Petroleum Dealers Association, said the bank has quoted RBI circular of December 16, 2016, for its action.
“Unfortunately, the circular has no reference to credit card charges or for not passing the same to the customers. We feel that HDFC Bank is using this as an excuse to improve their bottom line through transactions at fuel stations,” he said.
The association said that a similar circular was also sent by ICICI Bank and Axis Bank, although an ICICI spokesperson has denied levying any charges from tomorrow.
ICICI Bank and HDFC Bank account for around 60 percent of swipe machines deployed at petrol pumps across the country.
Bansal argued that petrol pump margins are fixed on a per kilolitre basis and owners simply don’t have any scope of absorbing these charges.
“We have specific mechanism to compute the margin and these do not have any scope for credit card MDR. This will lead to financial loses for the dealers,” he said, adding that credit card machine issuers are also delaying settlements of dues.
There are disputes about purchases being returned or not delivered.
“In a retail outlet, there is no scope for returns or not being delivered a product once you have paid for the same. The reconciliation of swipes to amount being credit to our accounts is causing a lot of hardships and loses to a large percentage of the dealer community.”
He said the petrol pumps have “decided to stop accepting payment through credit/debit cards from January 9, 2017”.
“All POS (point of sale) machine issuing banks who are not charging the same and are willing to adhere to existing commercial arrangements should correspond with us to let us inform our members to continue with accepting cards on their machines,” Bansal said.
“Petrol pump dealers across the country, including those in Gujarat, will stop accepting money through debit and credit cards from tomorrow to protest an RBI circular asking banks to debit 1 percent from petrol pump dealers account on payments through cards from January 9,” said Gujarat State Petroleum Dealers Association president Arvind Thakkar.
Thakkar is also a senior vice president of the All India Petroleum Dealers Association.
“By accepting money through debit and credit cards, we are providing service to our customers, and imposing 1 percent charge for the service is not reasonable. Therefore, we will not accept money through cards until this is rolled back,” he said.
The ministry, meanwhile, was unaware about the development and has asked banks to delay levying the charges till a compensation system for petrol pump dealers can be formulated and put in place.