Credit and debit cards will continue to be accepted at petrol pumps even after January 13 without customers having to pay transaction charges, the government said on Monday.
Banks and oil companies are in discussions as to who should bear these charges, it said a day after averting a crisis that would have hit millions of people as oil pump owners threatened to stop taking card payments.
Oil minister Dharmendra Pradhan said, "Merchant Discount Rate (MDR) charges on card payments for fuel purchase will not be passed on to customers.”
Oil companies and banks were discussing who will bear the MDR charges, he said.
On Sunday, hours after deciding to refuse card payments at fuel outlets from Monday to protest against some banks levying the MDR for purchases, petroleum dealers deferred their decision till January 13.
They argued that the levy of 1 per cent and between 0.25 and 1 per cent on credit/debit card transactions was hitting their profits.
"Merchant Discount Rate (MDR) charges will be levied as per RBI guidelines but who will take the hit? Banks, oil marketing companies are discussing," Petroleum Minister said.
"We are working on a mechanism to share the burden. But I assure you that there will be no impact on customers,” said Pradhan after a day of hectic negotiation.
"We had assured yesterday also that since retail outlets, petrol pump owners work as commission agents, we will not pass on the cost to them," he further said.
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% discount on fuel rate for using digital payments will continue.
Asked if petrol pumps will continue to accept card payments after January 13, he said, "They will accept cards. I want to assure the people of the country who want to do digital transactions in petrol pumps, they will continue to do so."
Before the government scrapped Rs 500 and Rs 1000 on November 8, customers paid a transaction fee along with a surcharge on it for buying fuel with debit or credit card. But for promoting cashless payments at petrol pumps, customers were exempted from paying these charges while the banks bore them.
The current crisis was triggered when banks decided to debit the fee from the account of petroleum dealers. Banks say their decision to charge the fee is based on a Reserve Bank of India circular that apparently doesn’t mention recovering the charge from consumers.
Petrol pump owners claim that their already thin margins will be under stress if the transaction fee is levied on them.