This is indeed a scary situation out here, especially for millions of vehicle owners, who are ready to pay for petrol and diesel using their debit/credit cards; but it seems that the petrol pump owners won’t support card based payments from Friday.
And their defiance towards cashless mode seems logical as well – because the banks are becoming greedier, and they want more mileage out of the cashless boom, quite literally.
The Conflict Between Petrol Pumps & Banks
Last week, the transportation industry was stunned when almost 80% of petrol pumps across India declared that they won’t be receiving card based payments effective Monday, January 9th.
The reason for this mass-scale strike was extra 1% transactions fees which the banks would charge from them for these payments. Such an additional charge on cashless payments meant scrapping of 20-40% of the profit earned by petrol pump owners, and this was not taken lightly.
Ajay Bansal, president, All India Petroleum Dealers Association, said, “HDFC Bank, Axis Bank and ICICI Bank have imposed 1 per cent charges on pumps, there was no such levy earlier. In fact, we used to get reimbursement from banks if any charge were applied,”
BR Ravindranath, president, Akhila Karnataka Federation of Petroleum Traders and Bangalore Petroleum Dealers Association, said, “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.”
And they know that such a strike against card based payments would be very serious for the end-users.
One of the managers at a petrol pump said, “The public will see us as the villains now. They will think we are inconveniencing them by demanding only cash, but the truth is not that. Sale of petrol/diesel is highly regulated and we cannot fix our own rates in view of this sudden levy by banks. So our best option is to not accept cards.”
Ravi Shinde, president, Petrol Dealers Association, Mumbai said, “HDFC Bank, without any reason or rationale, has sent us this letter and wants to charge 1 per cent fee on transactions when our entire commission is 2.7 per cent. They didn’t discuss the matter with us. So, we will stop use of all HDFC Bank PoS terminals at pumps in Mumbai.”
What Is This Additional Transaction Fees?
Major private banks such as HDFC Bank, ICICI Banks and others had earlier sent notifications to all petrol pump owners about the introduction of an additional 1% transaction fees on all payments done by debit and credit cards.
As per the notification, all transactions less than Rs 1000 would attract a transaction fees of 0.25%, those between Rs 1000 and Rs 2000 would attract additional fees of 0.50% and above Rs 2000, flat 1% additional charge. Besides, all credit cards payments would attract flat 1% transaction fees.
On their defense, bank officials are saying that this additional 1% transaction fees is the same fuel surcharge of 2.5% which was charged earlier from the customers. However, after the demonetization movie kicked in, Govt. had temporarily relieved this charge.
A bank official said, “This is an industry wide phenomenon. It’s not limited to private banks. We have just been proactive in communicating the MDR charges to petrol dealers. I think PSU banks will follow soon.”
Strike Delayed, But Situation Tense
On Sunday evening, Govt. officials met the banks authorities, and convinced them to deter them their move to charge additional 1% transaction fees, atleast till Friday (January 13th). After their assurance, petrol pump owners have postponed their strike which was supposed to start from today (Monday, January 9th)
Union Petroleum Minister Dharmendra Pradhan said, “Let me make it clear that customers will not be levied with any surcharge. Petrol Pumps were worried that the surcharge will be upon their heads, but let me assure them that it will not befall on them as well. Oil Marketing companies and banks are in talks and the former has given an incentive to increase digital transactions,”
However, situation is still tense, as banks have not clearly mentioned whether this surcharge would be scrapped or not.
Either Govt. will have to provide some subsidies on the card based payments to the banks, or this embargo will escalate into a bigger problem.
We will keep you updated.