SBP caps bank charges on digital sales of petroleum products to minimise burden on fuel stations

The State Bank of Pakistan (SBP) has capped bank charges on digital sales of petroleum products, responding to demands from petroleum dealers. This decision aims to alleviate the financial pressure on fuel stations and encourage the adoption of digital payment methods.

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This was too high compared to the fixed and regulated dealer commission of Rs8.64 per litre. After adding the 12pc withholding tax and other fixed charges, dealers were left with little option but to adopt dishonest means to survive.

Under the new regulations, the merchant discount rate (MDR) for card-based petroleum transactions is limited to a maximum of Re1 per liter. Charges for online transactions via QR codes and Raast have been capped at 20 paisas per liter. Previously, banks set these fees at their discretion, leading to significant variations and costs ranging from Rs3-4 per liter, which dealers found burdensome compared to their fixed commission.

Hassan Shah, spokesperson for the All Pakistan Petroleum Dealers Association (APPDA), explained that the high transaction fees, coupled with the 12% withholding tax and other fixed charges, left dealers with little profit, sometimes pushing them towards "dishonest means to survive." The situation was exacerbated by the daily pricing mechanism, which created a mismatch between product booking and delivery times, causing confusion and losses.

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Merchant Discount Rate (MDR) for all card-present transactions conducted at fuel stations for the purchase of fuel and related products shall be capped at Rs1.00 per litre.

The SBP's notification states that these capped rates will be effective until January 31, 2027, for all payment cards issued in Pakistan. The central bank is urging banks and regulated entities to actively assist fuel stations in enabling Raast QR-based payment acceptance. While the APPDA cautiously welcomed the move as a positive step for digital payments, they noted that even the revised rates might still be higher than economically justified, considering the investment in POS terminals and operating costs.

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We were not only suffering losses but always remained confused.