Home News

HUGE RELIEF – Banks defer decision to charge transaction fee on card payments at petrol pumps

SHARE

BENGALURU/NEW DELHI: Banks on Sunday night deferred their decision to charge 1% transaction fee on card payments at petrol pumps from Monday, a move that had prompted dealers to say they will stop accepting plastic money unless a mechanism to compensate them was also put in place.

Following the decision by bankers, petroleum dealers have put off till January 13 their decision to stop accepting cards.

The decision by the banks to defer the fee came after prodding from the Union Oil Minister Dharmendra Pradhan during discussions among bankers, dealers and representatives of state-run fuel retailers. “Banks have agreed to defer the fee for 4-5 days,” a senior oil ministry official told TOI, indicating a mechanism to compensate dealers would be worked out during this interval.

Denial of card payments for fuel would have caused major inconvenience to consumers in times of cash shortage and dealt a setback to the government’s push for cashless payments. Petrol pumps, as the government’s public interface, have been playing a major role in digital push.

Dealers said SBI, HDFC Bank and Axis Bank on Saturday night communicated to them about the surcharge. ICICI Bank, the country’s largest private bank, said they had not sent any such communication and would not charge the fee from Monday.

Following the notice, pump owners decided to stop accepting cards from Monday at a meeting of all dealers’ associations in Bengaluru on Sunday. All India Petroleum Dealers Association (AIPDA) president Ajay Bansal told TOI from Bengaluru that the 1% levy has been announced even when they were not getting their due in settlement of the 0.75% discount announced by government in December.

“They (banks) must apologise to the public,” B R Ravindranath, president, Akhila Karnataka Federation of Petroleum Traders and Bangalore Petroleum Dealers Association, said, claiming their net profit, after deducting all operational costs, stands at at 0.3% to 0.5%. “If the banks straight away levy a 1% transaction fee, where do they expect us to go. It becomes extremely difficult to survive in such circumstances.”

ICICI Bank and HDFC Bank account for some 60% of card swipe machines deployed at 52,000 petrol pumps out of the 53,842 public sector fuel retail outlets across the country. There are 56,190 petrol pumps in the country, including those run by private oil companies.
The government on December 8 decided that all state-owned establishments would have to bear the cost of card payments to them. In this case, the dealers are to be compensated by the oil retailing companies. But the mechanism is yet to be worked out as it involves bearing an annual burden of Rs 800-1000 crore for the retailers.

But still, the sudden move by the banks appears to have taken even the oil ministry by surprise. “To be fair to dealers the transaction fee has to be borne by the oil marketing companies. Discussion is required to set a system wherein dealers can raise daily demand on oil companies for compensating them,” the oil ministry official told TOI earlier.

loading...

LEAVE A REPLY