Representative image. Credit: Reuters
Petrol bunks in Bengaluru will stop accepting credit or debit cards as well as other cashless forms of payments from Monday onwards to protest a 1% transaction charge that banks plan to levy on all cashless payments.
B. R. Ravindra, president of the Akhila Karnataka Federation of Petroleum Traders and the Bengaluru Petroleum Owners’ Association told the News Minute, “Yesterday, we received a message that banks are going to levy 1% transaction charge on any cashless transaction made at petrol pumps. With this move, petrol pump owners will incur losses equal to twice the profit a petrol pump makes. Hence we have decided not to accept credit or debit cards as a payment option.”
ICICI, HDFC and Axis banks informed dealers of the new charge on Saturday night. According to the Times of India, ICICI and HDFC comprise about 60% of the card machines used at a total of 52,000 pumps across the country. 53, 842 of the 56,190 total pumps in India are publicly owned.
All India Petroleum Dealers Association (AIPDA) president Ajay Bansal told the Times of India, “Petrol pumps are the only sector where the banks bear the cost of even our communication lines used for the card swipe machines. So if they levy the fee, we cannot pass on the burden to consumers as the sale prices are set by oil companies, as also our margin. So that leaves burden sitting on our laps. We don’t have the strength to bear the burden and will collapse unless it is withdrawn or oil companies lend us their shoulders.”
The 1% service fee that banks want to charge for every use of their machines has become a point of contention for petrol pump owners since they will have to incur the extra fee, not consumers. Already struggling because of demonetisation and the cash crunch, an angry owner told the Hindu, “First they said 0.75 percent cash-back. Then they announced that cash would be available at petrol bunks. Now, they want 1 per cent for all transactions done by card. What will we be left with?” He was referring to the government’s announcement that consumers who purchase fuel through cashless means will get 0.75% cashback.
According to the Times of India, oil ministry officials were unaware of the banks’ decision to levy a 1% service fee. They told the newspaper that they’ve asked banks to hold off on imposing the extra charge until petrol pump dealers, “state-run fuel retainers, banks and petrol pump owners” have had a chance to discuss the implications of the move.
AIPDA has also written to finance minister Arun Jaitley, saying, “To compound matters further, these credit card machine issuers are delaying settlements and not settling the entire dues as per our settlements. There are disputes about purchases being returned or not delivered. The reconciliation of swipes to amount being credited to our accounts is causing a lot of hardships and losses to a large percentage of the dealer community.”