LPG agencies likely to face the heat of MDR, plan to approach government

Cooking gas distributors are evaluating the likely impact of the flat ₹5 Merchant Discount Rate (MDR) that the National Payments Corporation of India (NPCI) has proposed on transactions above ₹2,000 from October 15.

Commercial liquefied petroleum gas (LPG) cylinder sales coming under the purview of the levy is a given since the 19-kg refills priced nearly ₹3,000 each. But what is not clear to the distributors is whether they will end up attracting MDR on the domestic refills sales, to households, too.

Though the 14.2 kg cylinders come for less than ₹1,000 each, the common practice of permitting delivery personnel to collect payments from customers and remit the same to the agency subsequently may trigger the charge. “Delivery boys collect payments on their individual UPI account for the refills they supply through the day to the households. In the evening, they transfer the sum collected to the distributor. But from October 15, such bulk remittance are likely to attract the MDR,” Telangana LPG Distributors Association president Jagan Mohan Reddy said.

Stating the practice has become common with distributors not sharing QR code with each of the delivery personnel, he said the LPG distributors are studying the likely impact and plan to approach government soon seeking exemption from the MDR. Like the petroleum dealers, the cooking gas distributors are expected to flag the impact of the charge citing the fixed, thin margins on which they operate.

While announcing the MDR framework, the NPCI said for specific merchant categories such as railways, telecom services, insurance and fuel, among others, a flat MDR of ₹5 per transaction will be applicable for transaction above ₹2,000. The fixed fee instead of a 0.4% variable rate, for the specified sectors, will prevent cost escalations in critical public services, utility bill collection and thin-margin sectors like fuel retail. It ensures essential consumer services remain low-cost and digitally efficient, NPCI had said.