BackCard payments at petrol pumps: Govt nudges banks, oil firms to share costs
Neither customers nor fuel dealers will have to bear transaction charges for card payments at petrol pumps, says oil minister Dharmendra Pradhan
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New Delhi: Oil minister Dharmendra Pradhan said on Monday that neither customers nor auto fuel dealers will have to bear user charges for payment of fuel bills through credit and debit cards, indicating a possibility of user charges being shared by oil marketing companies and banks.
The government intervened on Sunday night in the dispute over who would bear user charges on credit and debit card payments at fuel stations and brokered a late-night deal between the All India Petroleum Dealers’ Association (AIPDA) and two banks whose card swiping machines dealers had threatened not to use.
As per the deal, the banks—HDFC Bank and Axis Bank—have deferred their plan to recover user charges from dealers until 13 January, according to association president Ajay Bansal.
“Neither the customers nor petrol pump dealers will bear additional charges on digital transactions at petrol stations...There will be no additional levy on digital transaction at petrol stations even after 13 January 2017," Pradhan said, according to an oil ministry statement.
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“Petrol pump transaction fee is a business model between the banks and oil marketing companies which they will resolve," according to the statement. It said the government had issued guidelines in February 2016 stating that the merchant discount rate (MDR) charge (card use charges) will not be passed on to consumers and that “the stakeholders will take appropriate steps to absorb" them.
An executive from Indian Oil Corp., the largest oil marketing company in the country, said on condition of anonymity that oil companies might be willing to bear a part of the card use charges if they are reduced as the companies are already burdened with the 0.75% cashback provision for digital transactions at filling stations.
In response to an emailed query, Axis Bank quoted Rajiv Anand, executive director-retail banking, as saying that banks have been working closely with oil marketing companies to help drive digital payments over the last two months.
“We partnered with them to quickly enable the processing for crediting the 0.75% incentive announced by the government to promote digital payments. Banks have also been coordinating with oil companies to set up card accepting terminals at outlets wherever required. We look forward to working closely with the oil industry to ensure that the momentum built for digital transactions can be carried forward and that customers are not inconvenienced by bearing the cost of the transaction," Anand said in the emailed statement.
An email sent to HDFC Bank remained unanswered at the time of going to press. As per a Reserve Bank of India (RBI) notification on 16 December, transaction charges on debit card usage are a maximum of 0.25% for up to Rs1,000 and 0.5% for transactions between Rs1,000 to Rs2,000. Banks now want to recover this from fuel dealers, rather than from the consumer as they used to earlier.
The oil company executive quoted above said, “We have to think of ways and means of resolving this issue. There appears to be a reasonable possibility that the card use charges can be further reduced and then shared between oil companies and banks."
According to Bansal of AIPDA, the bank that issues the swiping machine levies the transaction charge and hence credit and debit cards of all banks, including those of HDFC Bank and Axis Bank, faced no hurdles in getting accepted on point of sale machines issued by other banks during the period of agitation.
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