Cashless Petrol Pumps: Big Challenge For Banks & Modi Govt

There is an utter confusion regarding the payment of Merchant Discount Rate, i.e. MDR. On one side, the government is taking several measures to promote cashless economy. While, on the other side, obstacles like this one is hindering the entire process. At this point, where the promotion of digital campaign is at its peak, the government must take care of such situations. Confusion remains in the market as to who will pay the tax levied by the banks, at the petrol pumps.

• Who Will Pay This MDR At The Petrol Pumps?

Initially, even the Oil Ministry was surprised by the sudden move of the banks. A 1% transaction fee at petrol pumps had prompted dealers to proclaim that they will stop accepting plastic money. This would have eventually caused inconvenience to the various consumers, at the time of cash shortage. All of these would ultimately have caused adverse affect on the cashless transactions. Especially after the demonetization scheme, the Center is continuously pushing for an increase in the non-cash transactions. To fulfill cashless transactions itself, the government announced an offer of 0.75% cash back on petrol purchases, using plastic money.

According to dealers, several banks, such as ICICI, HDFC and AXIS Banks told them about the surcharge. But ICICI Bank denied giving any such information to the dealers. A meeting of all Petroleum Dealers took place, in which they decided to withdraw card swipe machines after 13^th of January. Neither the public, nor the dealers can be asked to pay this MDR. Hence, oil marketing companies are the only available option. To come up with the decision will require at least 2-3 days so as to develop a system in which dealers will be allowed to raise demand daily, and banks will compensate them. But the question that remained unanswered was, “Who will pay the MDR?”

• What Is This Confusion All About?

Just few hours after the news spread about the refusal of plastic money at petrol pumps, we got another news. But, this time the news was that credit and debit cards will be accepted even after 13^th of January. Transaction charges won’t be levied, as mentioned earlier. Well obviously this news has left me bewildered. First they say that MDR has to be levied in accordance with the RBI guidelines, and then they say that no charges will be levied. The announcement of the Petrol Pump operators had left us in a situation of crisis. Even after two months of the announcement of demonetization scheme, still the situation is not under control. In this situation people started using cashless transactions as that was the only available option to them.

Well, somehow the crisis has been postponed but we don’t know for how long. Let us just hope that the government comes up with a solution that is in favor of both, for us, as well the Petrol Pump Dealers. Banks and Oil marketing companies must come up with a plan so as to clear this confusion going on right now.