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The government has clarified that the consumers will not bear any extra burden on their auto fuel bills.
While assuring the petrol pump dealers that their concerns on charges being levied by the banks for digital transactions will be addressed, Minister of State (Independent Charge) for Petroleum and Natural Gas Dharmendra Pradhan said the oil marketing companies and the banks are looking at alternatives to mitigate any additional costs without burdening the consumers.
The whole controversy emerged when All India Petroleum Dealers Association protested against the levy of merchant discount rate by the banks on credit/debit card transactions post demonetisation from November 8.
The government also decided to incentivise plastic transactions through a 0.75 per cent discount on fuel purchase. As the sales from cash started shifting to plastic money, the dealers started feeling the pressure on their margins because of the additional levy.
The transition to digital transaction has been almost immediate. The sales through this mode increased to almost 25 per cent from 10 per cent earlier of the total sales.
Indian Oil Corporation, the largest oil retailer, saw an over three-fold increase in digital transaction since November 8.
Soothing the nerves of dealers, Pradhan said, “The new guidelines for merchant discount rate (MDR) have been issued by the RBI. Now banks and oil marketing companies are discussing on who will bear the liability for the same. MDR costs will not be passed on to fuel pumps owners.”
The merchant discount rate is an interchange fee paid to the bank that issues the credit or debit card used in each transaction.
He further said that the burden will be borne by the oil marketing companies or the banks or both. “It’s a business model between banks and OMCs. The government will not bear the MDR cost,” he said.
A senior executive from an oil marketing company said, it is a commercial decision so dealers cannot be fully left out.
The government is hopeful of resolving the issue by January 13, the time it had bought for sorting out the issue when threaten by the dealers. The dealers had threatened to stop accepting debit/credit cards unless the levy burden is withdrawn.
However, the Minister was categoric in stating that there will be no additional levy on digital transaction at petrol stations even after January 13.
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