UPI fuel payments above Rs 2,000 to attract flat Rs 5 MDR from Oct 15
Babushahi Bureau
Ludhiana (Punjab), September 20, 2026: Customers paying for fuel through UPI will continue to make payments without any additional transaction charge, even as a new Merchant Discount Rate (MDR) framework is set to come into effect from October 15.
Under the new framework, UPI fuel payments of more than Rs 2,000 will attract a flat Rs 5 MDR, which will be borne by petrol pump operators. Unlike the standard 0.4% MDR applicable to eligible merchant transactions above Rs 2,000, the fuel sector has been placed under a concessional flat-rate structure.
For fuel purchases of Rs 2,000 or less, no MDR will be applicable to the petrol pump. For payments above Rs 2,000, the charge will remain fixed at Rs 5 regardless of the value of the transaction.
For example, a UPI fuel payment of Rs 2,500, Rs 5,000 or Rs 10,000 would attract the same Rs 5 MDR on the merchant side.
The customer, however, will continue to pay only the amount of fuel purchased. The MDR is a merchant-side charge and is not to be passed on to the consumer.
The concessional rate for fuel is intended to keep payment-processing costs lower than the standard percentage-based MDR, under which a Rs 10,000 transaction would otherwise attract a Rs 40 charge.
The new framework has nevertheless drawn opposition from petrol pump dealers. Associations representing fuel retailers have sought an exemption from MDR, arguing that the additional cost could put pressure on their margins. Some dealer associations have also threatened to restrict or stop accepting UPI payments above Rs 2,000 if the charge remains.
The new MDR framework is scheduled to take effect from October 15, 2026.