Petrol pumps drop threat to stop card payments today

New Delhi: The Modi government late on Sunday said that surcharge of 1 per cent will not be imposed either customers and petrol pump owners for card transactions.

“Let me make it clear that customers will not be levied with any surcharge. Petrol Pumps were worried that the surcharge will be upon their heads, but let me assure them that it will not befall on them as well. Oil Marketing companies and banks are in talks and the former has given an incentive to increase digital transactions,” Union Petroleum Minister Dharmendra Pradhan said.

There was high drama till late Sunday night over the petrol pump owners’ threat to stop accepting credit and debit card payments in protest over the imposition of upto one per cent transaction fees by certain banks.

However, intervention by top government officials, including the PMO, saw the banks postponing their decision to impose transaction fees for a few days till the issue can be resolved in consultation with the petroleum ministry. After the banks’ announcement, the petrol pump owners too deferred their decision till Friday, and said that they will continue to accept card payments for now.

“The All-India Petroleum Dealers Association has received an official communication from the oil marketing companies that with the intervention of the petroleum minister the transaction fee charges have been deferred till 13th January 2017. The AIPDA also has decided to defer the agitation till 13th January 2017,” the association said in a late-night statement.

Earlier Sunday, many state associations of petrol pump owners, including Delhi and Tamil Nadu, among others, threatened that they will not accept any card payments from Monday onwards. AIPDA president Ajay Bansal said that HDFC Bank and Axis Bank had demanded upto one per cent Merchant Discount Rate (MDR) on each transaction. “Our margins are not so much that we can accept this one per cent charge on each transaction. We have specific mechanisms to compute the margin and these do not have any scope for MDR charges. This will lead to financial loses for the dealers,” Mr Bansal said.

The threat of petrol pump owners to reject card payments would have been a huge embarrassment for the Narendra Modi government, which has been claiming the increase in cashless transactions as one of the major achievements of the demonetisation of Rs 500 and Rs 1,000 currency notes on November 8.

A senior HDFC Bank official told this newspaper that the imposition of one per cent transaction charge in the form of MDR was an industry decision which had been taken by all banks. “We may have been one of the first to notify the petrol pump owners but this is a decision taken together by all the banks. It is not a decision only taken by us,” said the official. The official claimed earlier the banks were charging a fuel surcharge, but a notification from the government recently said now MDR will be imposed that the state-owned oil companies will bear. “So it is the oil companies which have to bear this charge as per the government notification,” the official said.

PSU oil marketing companies’ officials said that they had written to the banks to defer the imposition of transaction charge. “We have asked them for a meeting in 2-3 days to settle this issue under the guidance of the petroleum and even the finance ministry. It is correct that petrol pump owners cannot bear this charge. We will have to see what mechanism can be evolved to deal with this whole issue,” said an oil marketing company official.

After the demonetisation of Rs 500 and Rs 1,000 currency notes on November 8, the government has been pushing for cashless transactions all across the country. Making India cashless was projected by the Modi government as one of the major driving forces behind the demonetisation announcement. The petroleum ministry had also taken a series of initiatives to promote digital payments. State-owned petrol pumps are giving a discount of 0.75 per cent of sale price to consumers on the purchase of petrol and diesel through digital means.

The banks’ move would not have impacted consumers directly as no new charges will be levied on customers using debit or credit cards But it will cause inconvenience to the public as the cash crunch issue has still not been fully resolved.