MDR just tip of iceberg for petrol pumps

HYDERABAD: Developments on Sunday evening gave quite a few city commuters flutters. First, petrol pumps across the country announced that they had decided to stop accepting payment through debit and credit cards from Monday.

This was in response to introduction of MDR charges by banks from Monday. Late Sunday night, however, following Oil Ministry’s intervention banks agreed to defer the introduction of charges to January 13, so petrol pumps decided to defer their protest to that date. Through it all, commuters faced moments of anxiety, even as several pumps across the state remained unaware of the hullaballoo. Still, if pumps follow through on their threat, on January 13, the public, already reeling under the burden of demonetisation, is likely to be hit.

“They don’t accept the new Rs 2,000 notes for the lack of change. Since November 8, I have filled petrol worth Rs 300 on a daily basis by swiping my card. How can dealers stop digital transactions when everyone is suffering without enough cash,” rued Rohith, a software employee who shuttles between Tarnaka and Hi-tech city everyday. The pump dealers’ decision came in the wake of some private banks charging transaction charges for sales done through Point of Sales (PoS) machines.

The  Consortium of Indian Petrol Dealers (CIPD) said that this would cause financial losses to the dealers. Prashant K Reddy, member of TPPDA said: “We do huge volume of sales through PoS machines and were never charged transaction charges. The price of fuel is fixed and is not decided by the pump dealers. This also sets our profit margin. The added cost of transaction will now have to be borne by dealers. This will make the business unprofitable. Even at 1 per cent transaction charge, the cost burden on petrol pump dealers will be 30 to 40 per cent of gross dealer margin on petrol and diesel respectively,” said CIPD.

MDR charges just another burden for dealers

While banks usually charge 2 per cent transaction charges for sales done through PoS machines, PayTm has started charging 1 to 4 per cent transaction charges on merchants from December 31. Since demonetisation, petrol pump dealers have been battling on several fronts, right from dealing with problems of customers being charged twice to having to bear the initial cost of government subsidy. It may be mentioned that in November last, the Central government brought in a 0.75 per cent subsidy for customers opting for digital transactions at petrol pumps. “We pay that subsidy out of our pockets but are paid back by the oil companies almost a week later,” said Reddy.

The Ministry of Petroleum and Natural Gas, through a notification, encouraged all petrol pump dealers to go for digital transactions. The petrol pump dealers agreed and by December end over 90 per cent of their sales came through PoS machines and e-wallets. “Money for the sales done over PoS machine used to get credited overnight but now it takes three days. We end up borrowing money to restock the petrol pumps and that leads to tax issues,” Reddy added.
In December, the Ministry of Petroleum and Natural Gas had issued another notification asking all petrol pump dealers to submit details of transactions done through their accounts between November 8 and December 2. This too had added to the burden of petrol pump dealers already struggling to tally their oil bank accounts.

-The new Indian express