Beginning on Monday, vehicle owners planning to buy fuel from petrol pumps using their ATM cards will have a tough time. The difficulty arises after the petrol sellers declined to accept credit, debit cards in protest of the banks’ 1% levy for each sale.
With such a decision of not accepting plastic money, many consumers may be inconvenienced at a time when the country is facing cash shortage. This is a decision that has caught many, including the oil ministry by surprise.
The ministry officials in Delhi quickly reacted to the announcement saying they were still in the dark regarding the bank’s move. They requested the bank owners to suspend this levy until a new system is devised to assist the petrol pump dealers to compensate for such charges. The decision by the banks will not affect the citizens directly since the customers using the cards are not deducted.
The decision to decline card payments and accept only cash is being taken at a time when the Government wants to increase the number of non-cash transactions. It had even offered a 0.75 percent cashback for each petrol purchase using the plastic money.
Axis Bank, HDFC Bank and ICICI bank had notified dealers on Saturday night regarding the surcharge. 60 percent of all the card swipes are attributed to ICICI Bank and HDFC Bank accounts and they individually have 52,000 swipe machines at the 53,842 public sector fuel retail outlets across the country. India has 56, 190 private-owned petrol pumps.
Via Indian Express
Hurriedly-organized meeting arrives at a hurried decision
Immediately after the notice was issued, the pump owners jointly called for a meeting in Bengaluru on Sunday where they came up with the resolution. They said that their margin is tied on to per KL basis and thus will find it hard to bare the additional bank charges.
Ajay Bansal, President of All India Petroleum Dealers Association, said in a statement that due to “MDR of 1%,” it is their collective decision not to accept payment via “Credit/Debit Cards from 9th January 2017.”
He went on to explain that they have well-laid-out techniques for calculating the margin and they don’t “have any scope for credit card MDR.” He regretted that the dealers would experience intense financial losses.
Bansal expressed frustration that banks take forever to settle their dues, breaking their agreement. He said that they have to contend with scenarios where a purchase is either returned or not delivered. “In a Retail Outlet there is no scope for returns or not being delivered a product once you have paid for the same,” he was quoted by the Indian Express.
On the other hand, B R Ravindranath, president, Akhila Karnataka Federation of Petroleum Traders and Bangalore Petroleum Dealers Association, told Times Of India in Bengaluru that the banks should issue an apology to the public.
The dealers have raised concerns that with such transaction fees, the banks will enjoy all their profits. As Ravindranath states, letting the banks have their way will see the dealers get only a 0.3% to 0.5% net profit.