No More Discounts On Credit Card Payment At Petrol Pumps
An electronic payment terminal sits on a metal drum at a station in New Delhi, India. (Photographer: Prashanth Vishwanathan/Bloomberg)

No More Discounts On Credit Card Payment At Petrol Pumps

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Credit card payments to buy fuel at petrol pumps will, from Oct. 1, not get a 0.75 percent discount that state-owned oil companies had introduced more than two-and-a-half years back to promote digital payments.

"Dear SBI credit cardholder, as advised by public sector oil marketing companies, the 0.75 percent cashback on fuel transactions will be discontinued with effect from Oct. 1, 2019," the country's largest bank in a text message informed its credit card customers.

The government had asked Indian Oil Corporation Ltd, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd to give a 0.75 percent discount on card payments for fuel purchases after a widespread cash crunch in late 2016 following demonetisation of 86 percent of currency notes in circulation.

The 0.75 percent discount of the value of fuel purchases using credit/debit cards and e-wallets was introduced in December 2016 and had continued for more than two-and-a-half years, straining OMCs.

Apart from the cash discounts, the government had also directed OMCs to bear the burden of card payment charges called merchant discount rate, which is usually paid by the retailer.

An industry official said the oil companies have decided to discontinue the discount on all credit card payments from Oct. 1. However, the discount on debit card and other digital modes of payments would continue, he said.

The three fuel retailers paid Rs 1,165 crore in e-payment discounts and Rs 266 crore to banks for bearing MDR, totalling Rs 1,431 crore in 2017-18. In 2018-19, the outgo almost touched Rs 2,000 crore.

This after the number of digital transactions jumped from 10 percent in 2016 to over 25 percent in 2018. The oil companies in August last year reduced the discount for all fleet customers using loyalty programmes from 0.75 percent to 0.25 percent in order to stem the cash outgo.

Petrol currently costs at Rs 74.13 per litre in Delhi, while a litre of diesel costs Rs 67.07.

Also read: Indian Oil’s Debt May Surge If It Buys Government Stake In BPCL

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