Banks, oil companies to bear card payment charges

RSTV Bureau
Oil Marketing Companies and Banks will share the burden of MDR charges (Merchant Discount Rate) levied by banks on petrol pumps for using card based payments.

Oil Marketing Companies and Banks will share the burden of MDR charges (Merchant Discount Rate) levied by banks on petrol pumps for using card based payments.

Banks and oil marketing companies (OMCs) will bear transaction charges for the fuel bought using cards at petrol pumps, Oil Minister Dharmendra Pradhan said today.

“The decision is very clear. Consumers will not be burdened with Merchant Discount Rate (MDR). Retail outlets (petrol pumps) will also be kept out of its purview. Now it is between banks and OMCs how they share it,” he said.

Pradhan was speaking to reporters after attending a meeting on the issue that was called by the Department of Financial Services, Ministry of Finance.

“It is a commercial decision and they (banks and OMCs) will sit together and sort it out,” he said.

MDR is a charge levied on merchants by banks for accepting payments through credit and debit cards. This charge was passed on to consumers but post-demonetisation, the government, in a bid to promote digital payments, waived it till December 30.

Banks, after that date, decided to pass on the MDR to petrol pump operators since the government mandate was very clear that consumers should not be burdened with any additional charge for using cards for payments.

Petrol pump owners threatened to stop accepting card payments, forcing the government to broker a settlement.

Pradhan said banks and oil companies will continue to discuss as to who should bear these charges and in what proportion.

“MDR charges will be levied as per RBI guidelines of December 16,” he said.

Asked if it will be shared equally between the oil marketing companies (OMCs) and banks, he said: “That is yet to be decided.

Pradhan said the government stands by its decision that customers using non-cash digital modes of payments will not have to pay any transaction charge. Also, the 0.75 per cent discount on fuel rate for using digital payments will continue.

“Banks and OMCs are discussing the issue. In the next couple of days a mechanism will be worked out so that MDR are levied from 16th,” he said.

MDR of 1 per cent on all credit card transactions and between 0.25 per cent and 1 per cent on all debit card transactions will be charged on fuel bought through cards.

Pradhan said “neither the customers nor petrol pump dealers will bear additional charges on digital transactions at petrol stations”.

The government, he said, had issued guidelines in February 2016 stating that the MDR charge will not be passed on to the consumers and the stakeholders will take appropriate steps to absorb it.

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