Service Charges On Credit Card Payments At Petrol Pumps? Here's What The Govt Said

The Ministry of Finance has responded to concerns raised in the Lok Sabha regarding the service charges by banks on credit and debit card transactions at petrol pumps. The government outlined the Reserve Bank of India’s (RBI) perspective on these charges and their alignment with efforts to promote digital payments.

Minister of State for Finance, Pankaj Chaudhary, confirmed that the government is aware that banks impose service charges on credit/debit card payments at petrol pumps. But the government hasn't given any clear orders to do away with or change these petrol station fees.

RBI’s View on Payment Service Charges

Chaudhary also referenced the Reserve Bank of India's (RBI) Discussion Paper on Charges in Payment Systems, published August 17, 2022, which presents the RBI's take on this issue. To balance costs for consumers with just returns for service providers, the RBI underlined that fees for payment services should be fair and set by market forces. The idea is to set a fee structure that caters to the demands, supply and growth of digital payment systems without overburdening users.

The Reserve Bank of India emphasized that service charges for payment systems should be reasonable, determined by market forces and not impede digital transactions. Instead, these charges should encourage the use of digital channels to reduce cash dependency.

Impact on Cash Reduction and Digital Payment Promotion

The Financial ministry also responded to queries about whether these fees impede initiatives to encourage digital payments and lessen the use of cash. They clarified that the imposition of service charges should not prevent the goal of encouraging digital transactions. The primary objective is to increase the adoption of digital payments, and while such charges exist, they should not interfere with the broader push toward a less cash economy.

No Timeline Set for Removal of Service Charges

Pankaj mentioned that the RBI has not addressed the problem of service charges at gas stations by issuing any directives or setting any timeframe for their elimination. The administration has left the topic open for further review without providing a specific timeline for adjustments to the charges.