No More Discounts On Digital Payments At Petrol Pumps, Oil Companies To Discontinue Benefits Due To Financial Strain 

The discounts offered at petrol pumps for payments made electronically might soon be a thing of the past after oil marketing companies (OMC) are looking to wind them up owing to the financial strain reports Live Mint.

The government has earlier asked OMCs to give discount up to 0.75 per cent on card payment for fuel purchases, against the backdrop of a cash crunch post demonetisation in 2016.

Indian Oil Corp. Ltd (IOCL), Bharat Petroleum Corp. Ltd (BPCL) and Hindustan Petroleum Corp. Ltd (HPCL) give a cash back equivalent to 0.75 per cent of the value of fuel purchased using credit/debit cards and e-wallets. The discount gets credited to the buyer’s account within three days of the transaction.

Apart from the discounts, the OMCs had to bear the additional burden of the Merchant Discount Rates (MDR) to be paid by the retailer.

The burden of discounts and MDR is said to be taking a toll on the revenue of the OMC since they cannot pass on the liability to the customers, Mint quoted an official from an OMC as saying.

Reports suggest that OMCs had 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, according to figures from these companies. For this fiscal year, they have estimated a higher cash outgo of nearly Rs 2,000 crore.

The number of digital transactions for OMCs, however, saw a spike from 10 per cent in 2016 to up to 25 per cent so far.

Subsequently the OMCs had reduced the discount for all fleet customers using loyalty programmes from 0.75 per cent to 0.25 per cent, to stem the erosion of revenue.