Banks relent after petrol pumps warn ‘no card, only cash’
DEMONETISATION FALLOUT Govt brokers truce between fuel retailers and banks till Friday on transaction fee tussle
NEW DELHI: Banks decided to defer charging fuel retailers a transaction fee till January 13, after petrol pumps across the nation threatened to stop accepting credit and debit cards from Monday in protest against a levy of 1% on card payments.
The banks didn’t reverse their decision to charge the fee, also known as the merchant discount rate, but postponed it after the government intervened on Sunday.
In a letter to the finance and petroleum ministries, the All India Petroleum Dealers Association (AIPDA) said: “HDFC and other banks have informed us that they will charge 1% on all credit card transactions and 0.25% to 1% on all debit card transactions from January 9.”
The letter says the banks’ decision is based on a Reserve Bank of India (RBI) circular on December 16 last year. The RBI circular apparently does not mention recovering these charges from customers.
“The same will be debited to petroleum dealers’ account and net transaction value will be credited to our account ... This will lead to financial losses for the dealers,” AIPDA president Ajay Bansal wrote.
There are about 56,200 petrol pumps in India, including those of private companies such as RIL and Essar.
A source in the petroleum ministry said they were aware of the issue.
“We are trying to negotiate with the banks so that they postpone levying the transaction fee. On Monday, all parties can discuss and resolve the issue,” the source said.
The petroleum dealers’ threat could put paid to government’s push for plastic money after it recalled 500- and 1,000-rupee notes in November, wiping out 86% of the cash in circulation.
The cash crunch from the demonetisation drive triggered long queues at banks and ATMs. The latest decision of petrol pumps would mount more pressure on the government to dispense banknotes.
Before the shock recall of two high-value notes, customers paid a transaction fee along with a surcharge for buying fuel with debit or credit cards.
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