A new payment rule could change how customers pay at petrol pumps, with the government likely to examine a demand for a complete exemption from the Unified Payments Interface (UPI) Merchant Discount Rate (MDR) on fuel transactions above Rs 2,000.

The issue has gained attention ahead of the implementation of the new UPI MDR framework on October 15, 2026. Petrol pump dealers have raised concerns that the proposed charges could put additional pressure on their already limited operating margins.

The Department of Financial Services (DFS) is likely to examine a representation seeking relief for petrol pumps, according to government sources.

According to reports, the matter is expected to be reviewed, while another indicated that it could be discussed at a higher level before a final decision is taken.

However, sources at the higher level said no proposal seeking changes to the announced MDR structure had reached them “as of now.” The Finance Ministry and Petroleum Ministry have also been approached for comments, but responses were not available.

Under the upcoming framework, person-to-merchant (P2M) UPI transactions above Rs 2,000 will attract an MDR. While the standard rate is capped at 0.4%, fuel transactions are expected to carry a flat MDR of Rs 5. Payments of Rs 2,000 or below will remain free.

The All India Petroleum Dealers Association (AIPDA) has sought a complete exemption from MDR and related transaction charges for fuel payments above Rs 2,000. In a September 16 letter to Finance Minister Nirmala Sitharaman, AIPDA president Ajay Bansal sought government intervention.

The association argues that petrol pump dealers operate on fixed margins determined by oil marketing companies.

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These margins are linked largely to the quantity of fuel sold rather than transaction value, limiting dealers’ ability to absorb additional payment costs.

Dealers in Madhya Pradesh and Punjab have announced plans to stop accepting UPI payments above Rs 2,000 from October 15 if the rule takes effect.