Petrol pumps may stop accepting debit and credit card payments from tomorrow

As the banks have levied a 1% transaction fee on card payments at petrol pumps, the dealers are planning to stop accepting plastic money from Monday, which could inconvenience consumers in times of cash shortage and affect the government's move to encourage cashless transactions.

In Delhi, ministry officials said they were unaware of the move by the banks and have asked them to put off the levy till a system of compensating the petrol pump dealers is discussed by all stakeholders- state-run fuel retailers, banks and petrol pump owners. The banks' move wills not target citizens directly as no new charges will be levied on customers using cards, according to a news report by The Times of India.

Stopping card payments and accepting only cash at petrol stations comes at a time when the Centre is pushing for increased non-cash transactions and announced a 0.75% cashback offer on purchase of petrol using plastic money.

ICICI Bank, HDFC Bank and Axis Bank sent notices to dealers on Saturday night to inform them about the surcharge. 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.

Following the notice, pump owners took the decision to stop accepting card payments at a meeting of all petrol pump dealers' associations in Bengaluru on Sunday. All India Petroleum Dealers Association (AIPDA) president Ajay Bansal told TOI from Bengaluru that all pump owners are firm in their decision to withdraw card swipe machines from intervening midnight of Sunday and Monday.

"They (banks) must apologise to the public," B R Ravindranath, president, Akhila Karnataka Federation of Petroleum Traders and Bangalore Petroleum Dealers Association, told TOI in Bengaluru.

Dealers say the transaction fee by banks will wipe out their profit, which is set by the state-run fuel retailers. Ravindranath claimed the 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," Ravindranath told TOI.