Consumers will not have to pay transaction fees on card payments at petrol pumps across India, the government said on Monday, as banks extended the deadline for talks on the matter indefinitely.
“We are working on a mechanism to share the burden. But I assure you that there will be no impact on customers,” said oil minister Dharmendra Pradhan after a day of hectic negotiation.
The banks – which charge between 0.25% and 1% fee on credit and debit card transactions – decided to defer imposing the levy on fuel retailers beyond January 13, the earlier deadline, after the government intervened.
There are about 56,200 petrol pumps in India, including those run by private companies such as Reliance and Essar.
Top sources in a private bank said that, “We want the cost of the transaction fee to be paid by the state-run oil companies. We have already made this demand before the government, this was part of the government notification in December”.
Sources in these state-run oil companies on their part say that they are already bearing the cost of the 0.75% cash back offered to customers for card payment for buying fuel.
On Sunday evening, petrol pump owners threatened to stop accepting debit and credit card payments from customers unless banks reversed their decision to charge the transaction fee.
The move to charge the fee -- also known as the merchant discount rate -- threatened to derail the government’s cashless drive. The crisis was averted after furious last-minute talks on Sunday night as banks postponed their decision and pumps agreed to keep accepting cards.
But after Monday’s announcement, talks between banks and pump owners can continue indefinitely without the burden passed on to consumers.
“We have resolved this issue. No transaction fee will be charged on fuel retailers for now,” top petroleum ministry sources said.
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. The All India Petroleum Dealers Association had written to the finance and oil ministers over the weekend , requesting government intervention.