Finance Ministry sources said on 24 Sep 2026 that no proposal had reached it to exempt petrol pumps from the new UPI merchant discount rate (MDR). Under the official framework issued on 15 Sep, fuel payments above ₹2,000 are scheduled to attract a flat ₹5 merchant-side fee from 15 Oct 2026, while the customer-facing UPI payment remains free.
That means the change is about how a fuel station’s payment is settled, not a ₹5 surcharge on petrol or diesel. The immediate uncertainty is operational: dealer associations are seeking relief, and some have indicated that they may stop accepting larger UPI payments if no exemption is granted.
Key takeaways
- The revised UPI framework is scheduled to take effect on 15 Oct 2026.
- At fuel stations, a UPI payment above ₹2,000 is listed for a flat ₹5 MDR, rather than the standard 0.4% rate.
- Payments below ₹2,000 remain outside the MDR framework, and customers are not meant to pay the merchant fee.
- As of 24 Sep 2026, Finance Ministry sources said no proposal to remove the fuel-station fee had reached the ministry.
Editorial illustration of refuelling and QR payment at an Indian petrol station. Credit: FuelPrice/AI-generated illustration.
What changes for UPI fuel payments
The Department of Financial Services’ 15 Sep 2026 FAQ sets a general 0.4% MDR for eligible person-to-merchant UPI payments above ₹2,000. It puts fuel, along with certain other specified categories, in a concessional flat-fee group: the merchant-side charge is ₹5 for a qualifying fuel transaction above ₹2,000, regardless of whether the bill is ₹3,000 or ₹10,000.
For a driver, the important distinction is between the price of fuel and the cost of accepting the payment. The official FAQ says consumers will not be charged for using UPI, and that merchants cannot pass the MDR on to buyers. A ₹3,000 petrol purchase is therefore still a ₹3,000 fuel purchase under the stated framework; the ₹5 is a payment-processing cost assigned to the merchant.
Fuel payments below ₹2,000 remain at zero MDR. The rule also does not change the displayed petrol, diesel or CNG price. Drivers can check the latest city and state rates separately through FuelPrice’s live fuel-price tracker.
Why petrol dealers are asking for an exemption
Petrol pump associations say their margins are prescribed through the oil-marketing-company system and are linked to fuel volumes rather than the value of each digital transaction. A fixed ₹5 cost on every qualifying UPI payment can therefore reduce the amount retained by a dealer, even when the station has no authority to add a payment surcharge to the displayed fuel price.
The fixed-fee design matters for fleet operators and motorists who buy more fuel in one transaction. The fee is not calculated per litre and does not rise with a ₹10,000 bill, but it is charged per qualifying payment. Splitting a purchase into several payments would not be a guaranteed solution because each transaction’s treatment depends on the merchant and payment system, and the official framework is intended to govern the merchant account rather than provide a consumer workaround.
The issue is also separate from a fuel-price revision. A dealer’s payment cost and the retail price printed on the pump are different parts of the transaction. That distinction matters when calculating a monthly fuel budget: use actual fuel rates and kilometres in the fuel cost calculator, then treat payment acceptance as a separate check.
What the 24 September update means
On 24 Sep 2026, NDTV Profit and Moneycontrol reported, citing official or Finance Ministry sources, that no proposal from the Petroleum Ministry to remove the ₹5 fuel-payment MDR had reached the Finance Ministry. That wording describes the position reported on that date; it is not a permanent bar on a later representation or policy change.
Moneycontrol also reported that government sources viewed the dealers’ broader concern as a matter between oil marketing companies and retailers, while dealer associations were seeking a complete exemption. Earlier reporting by Business Standard recorded discussions between Petroleum Ministry officials and the All India Petroleum Dealers Association. The two sides’ positions remain different: the framework is scheduled for implementation, while dealers want fuel outlets treated as a special category.
What drivers should watch from 15 October
There is no announced consumer-side UPI fee for refuelling under the official framework. However, a pump can decide which payment modes it accepts, and dealer associations in some states have said they may stop accepting UPI payments above ₹2,000 if their demand is not addressed. That is a reported dealer position, not a nationwide instruction already in force.
Before a long journey, drivers and fleet managers can check the payment options at the fuel station they plan to use and keep the transaction confirmation. A route built in the road-trip planner can also help estimate where refuelling may be needed, but it cannot guarantee that every station will accept every payment method after 15 Oct.
If a pump displays or requests an extra amount specifically for paying by UPI, the official framework says the MDR should not be passed on to the customer. Ask for a clear bill and retain the UPI receipt so the fuel amount and any separate charge are not confused. Any change to this position would need to come through an official update from the relevant payment or government authorities.
What happens next
Unless an official revision is announced, the scheduled date remains 15 Oct 2026. The practical outcome will depend on whether the government, payment-system participants, oil marketing companies and dealer associations agree on an exemption, reimbursement or another settlement arrangement before then. For now, drivers do not need to treat the announcement as a petrol-price hike, but they should be aware that large UPI fuel payments could face a change in acceptance at individual outlets.
Quick answers
Will a driver pay ₹5 extra on a fuel bill above ₹2,000?
Not under the official framework. The ₹5 is a merchant-side MDR for a qualifying fuel transaction, and the Finance Ministry FAQ says merchants cannot pass it to the customer.
Are all UPI payments at petrol pumps affected?
No. Fuel payments below ₹2,000 remain outside the MDR framework. The flat ₹5 rule is scheduled for qualifying fuel payments above ₹2,000 from 15 Oct 2026.
This article is for general information only and is not financial, insurance or legal advice.
Sources
- Department of Financial Services, “FAQs on Merchant Discount Rate (MDR) on Select UPI (P2M) Transactions”, 15 Sep 2026
- Ministry of Finance via PIB, “UPI Continues to Remain Free for Peer to Peer Transactions and 96% of Merchant Transactions”, 15 Sep 2026
- NDTV Profit, “No Proposal From Petroleum Ministry To Scrap Rs 5 Fee On UPI Transactions At Fuel Stations: Sources”, 24 Sep 2026
- Moneycontrol, “Petrol dealers’ issue is not linked to UPI MDR, it is between OMCs and retailers; No proposal to scrap MDR on fuel purchases: FinMin sources”, 24 Sep 2026
- Business Standard, “Oil ministry officials meet petroleum dealers body on MDR exemption demand”, 17 Sep 2026
