After Saying No To Card Payments Due To Losses, Fuel Pumps Finally Agreed To It
January 9th, 2017
Many banks around the country intimated petroleum dealers that a fee of 1% would be levied on all transactions done at retail fuel outlets from 9 January 2017. In retaliation, the All India Petroleum Dealers Association declared that petrol pumps around the country would stop accepting payment through credit/debit cards from 9 January 2017.
Ajay Bansal, President of the All India Petroleum Dealers Association, protested against the transaction fees charged by the banks, stating that this would lead to financial losses for the petroleum dealers. “We have been informed by HDFC and other banks that we will be charged 1% on all Credit Card Transactions and between 0.25% and 1% on all debit card transactions from 9th January 2017 … They have quoted RBI Circular DPSS.CO.PD. No.1515/02.14.003/2016-17 dated 16th December 2016 as the root cause of this debit. Unfortunately, neither that circular nor the circular referred to by the above said circular have any 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. Both RBI Circulars are enclosed along with HDFC Bank advice to dealers. Our margins are fixed on a per KL basis and do not have any scope to absorb these charges. We have specific mechanisms to compute the margin and these do not have any scope for credit card MDR. This will lead to financial loses for the dealers.”
(The Merchant Discount Rate (MDR) is the commission paid to the bank for every transaction made by the user. Since 2012, the Reserve Bank of India has capped the MDR for debit card transactions.)
The All India Petroleum Dealers Association also raised concerns over credit card machine issuers “delaying payments and not settling the entire dues”.
A source to the Hindustan Times said, “We were not given any date for discontinuing this by the government. The unsaid understanding was that these levies would start after the first week of January.”
When The Logical Indian contacted Mr. Bansal for a comment, he said the transaction fees was a huge loss for petroleum dealers around the country. “We operate on a thin margin; a transaction charge of 1% levies huge losses on us. We will wait till the banks reach a decision on 13 January. We expect the same status as on before 8 November – that is, no transaction charges to be borne by the petroleum dealers.”
Following the protest by the petroleum dealers, banks postponed a decision on the transaction fee to 13 January. It must be noted that not all banks planned to levy charges on fuel payments via card from 9 January. Many are yet to take a decision on it. The All India Petroleum Dealers Association has stated that it will wait for the banks’ decision before taking any further action.