In this context, the Oil Companies Advisory Council (OCAC), the OMCs’ representative organization, has addressed a letter to the SBP requesting a reconsideration of the bank fees known as the merchant discount rate (MDR).
While banks and switch operators charge an average of 1.5 percent at gas stations, OMCs and their dealers (owners and operators of gas stations) bear the cost of transactions performed for clients using debit and credit cards.
The fees are cutting into the profits of OMCs and their dealers, and the sector cannot maintain the amount of MDR now levied on gasoline transactions.
The letter further states that the government regulates fuel prices (motor gasoline and diesel), including OMCs and dealers’ margins, and that the margins are determined on an absolute basis rather than based on a percentage of final selling prices.
In order to encourage the usage of digital payments, the OCAC has suggested to the SBP Governor that MDR on gasoline purchases be set at 0.3 percent.
It is important to mention that due to this problem, a few gas stations have stopped allowing consumers to pay with debit and credit cards.
To read our blog on “RuPay credit card-UPI connectivity would promote P2M transactions, RBI,” click here.