The Madhya Pradesh Petrol Pump Dealers Association has announced a major change in payment rules across the state. From October 16, petrol pumps will not accept UPI payments above ₹2,000. The association took the decision after the government introduced a Merchant Discount Rate (MDR) on certain UPI transactions. Petrol pump dealers say the new charge will increase their operating costs. According to the association, the MDR could cost each petrol pump dealer around ₹17,400 every month. "We have taken this decision because of the MDR charge," said Madhya Pradesh Petrol Pump Dealers Association President Ajay Singh. The new MDR will apply to certain UPI payments from October 15. However, the government has started discussions with payment gateways and other stakeholders to ensure that merchants do not transfer the cost to customers. The Finance Ministry has also directed banks to make sure merchants do not recover the MDR from consumers. The ministry clarified the position in a post on X. It also said UPI apps cannot charge users separate platform fees.

Government Plans Mechanism to Protect UPI Users

From October 15, a 0.4% MDR will apply to person-to-merchant UPI payments above ₹2,000. Merchants will pay the charge. However, the government has placed a maximum cap of ₹300 for transactions worth ₹75,000 or more. At the same time, person-to-person UPI payments will remain free. Most routine merchant transactions will also continue without charges. The Finance Ministry is now preparing a monitoring system. The mechanism will track whether merchants pass the MDR cost to consumers. Meanwhile, the government has held discussions with payment aggregators and other participants in the UPI system. Officials want to ensure that users do not face an additional financial burden.

Only Small Share of UPI Transactions Affected

Government sources said the new MDR will affect only about 4% of the total volume of UPI transactions. Therefore, officials do not expect the measure to significantly reduce the use of UPI payments. There were also concerns that customers might return to cash payments after October 15. However, government sources said such a shift is unlikely. RuPay debit card payments will remain completely free, regardless of the transaction amount. This could provide users with another digital payment option for larger purchases.

Government Rules Out Major Inflation Impact

The government also does not expect the new MDR to create a significant inflationary impact. Officials said the charge is unlikely to result in higher prices for goods and services. The government is also working to ensure that merchants do not transfer the additional cost to customers. Meanwhile, the Finance Ministry has rejected claims that the MDR was introduced because of pressure from the United States. "The allegation that MDR has been introduced under any external influence is patently false and misleading," the Department of Financial Services said in a post on X. The statement came after Opposition parties, including the Congress, accused the government of introducing the MDR under US pressure. The government has rejected those allegations and maintained that the new mechanism will not place an additional burden on consumers.