Several petrol pumps, other businesses to refuse UPI payments above Rs 2,000 from Oct 16: Is it legal?
&imwidth=600&imheight=450&format=webp&quality=medium "Several petrol pumps, other businesses to refuse UPI payments above Rs 2,000 from Oct 16: Is it legal?")
Several petrol pumps to refuse UPI payments above Rs 2,000: Is it legal?
Petrol pump dealers in Madhya Pradesh say they will stop accepting UPI payments above Rs 2,000 from October 16 over a proposed 0.4% Merchant Discount Rate. While consumers will continue using UPI for free, dealers say their narrow margins make absorbing the new merchant charge difficult.
The Madhya Pradesh Petroleum Dealers Association has announced that its members will not accept UPI payments above Rs 2,000 from October 16, citing the 0.4 per cent Merchant Discount Rate (MDR) charge proposed on such transactions. Association president Ajay Singh said that they have written a letter to our State-Level Coordinator (SLC) regarding the government’s decision that an MDR charge of 0.4 per cent will be levied on UPI transactions above Rs 2,000 from October 16. "The situation is that, on average, around 100 customers at each petrol pump make transactions above Rs 2,000. This will result in a loss of around Rs 590 per day, which comes to approximately Rs 17,700 per month,” Singh said. He added petrol pump dealers have a profit margin of around 0.5 per cent and therefore cannot absorb the additional expense. Singh also urged the government to extend the exemption from MDR charges available to petrol pumps on credit and debit card transactions to UPI payments as well.
Can businesses deny UPI payments?
A massive wave of merchants, including fuel pumps, grocery stores, and local traders across Delhi-NCR and Ghaziabad, have started putting up "Cash Only" or "No UPI" signs. This is legally not a violation as in India, cash remains the primary legal tender, and while the government aggressively promotes a digital economy, private shopkeepers and merchants are not legally mandated to accept UPI or other digital payment methods. The only exception applies to massive commercial entities with an annual turnover exceeding ₹50 crore, which are required by tax laws to provide at least one digital payment option. For standard retailers, local vendors, and small businesses, choosing which payment methods to accept is entirely at their own discretion.
UPI rule in India
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Starting October 15, a 0.4% Merchant Discount Rate (MDR) will be applied strictly to specified Person-to-Merchant (P2M) transactions that exceed ₹2,000. The fee structure is capped at a maximum of ₹300 per transaction. Regular consumers will not pay any fee for making UPI payments, and all standard Person-to-Person (P2P) transfers remain entirely free. Small merchants earning up to ₹1 lakh per month via eligible UPI QR codes are exempt from this framework to protect local businesses.
