Earlier, credit card users were able to avail a 0.75 percent discount while buying fuel at petrol pumps.
The discount that state-owned oil companies had introduced around two years back on credit card payments at petrol pumps will be discontinued starting October 1, news agency PTI reports.
Earlier, credit card users were able to avail a 0.75 percent discount while buying fuel at petrol pumps. This had been introduced by oil companies with the aim of promoting digital payments.
"Dear SBI credit card holder, as advised by public sector oil marketing companies, the 0.75 percent cashback on fuel transactions will be discontinued with effect from October 1, 2019," the country's largest bank informed its credit card customers via text message.
Following demonetisation in late 2016, the government had asked Indian Oil Corp (IOC), Bharat Petroleum Corp Ltd (BPCL) and Hindustan Petroleum Corp Ltd (HPCL) to give a 0.75 percent discount on card payments for fuel purchases. The move to demonetise the Rs 500 and Rs 1,000 currency notes led to a widespread cash crunch in India.
Oil marketing companies (OMCs) were strained as a result of the 0.75 percent discount on fuel purchases using credit/debit cards and e-wallets which was introduced in December 2016 and had continued for more than two-and-a-half years.
Apart from the cash discounts, the government had also directed OMCs to bear the burden of card payment charges called merchant discount rate (MDR), which is usually paid by the retailer.
An industry official told PTI that the oil companies have decided to discontinue the discount on all credit card payments from October 1.
However, the discount on debit card and other digital modes of payments would continue, he added.
In 2017-18, the three fuel retailers paid Rs 1,165 crore in e-payment discounts and Rs 266 crore to banks for bearing MDR, totalling Rs 1,431 crore. In 2018-19, the outgo almost touched Rs 2,000 crore.
This was after the number of digital transactions jumped from 10 percent in 2016 to over 25 percent in 2018.
To stem their cash outgo, oil companies in August last year reduced the discount for all fleet customers using loyalty programmes from 0.75 per cent to 0.25 per cent.
Officials, however, said that discounts on debit cards and other modes of digital payments will continue for now.
The 0.75 per cent discount on payments made using either credit/debit cards, e-wallets or mobile wallets translated into a rebate of about 50 paise a litre on petrol and diesel.
Petrol currently costs at Rs 74.13 per litre in Delhi, while a litre of diesel costs Rs 67.07.
Exactly a month after the shock demonetisation of old 500 and 1,000 rupee notes, the government had on December 8, 2016, announced a raft of measures, including discounts on online payments for insurance policies, rail tickets and highway toll charges as the government looked to promote digital cash post note ban.
In December 2016, a 10 percent discount on general insurance products purchased online and 8 percent on life insurance bought online was announced. Railways passengers were encouraged to go cashless with a 0.5 percent discount on monthly and seasonal tickets for suburban railway networks. The railways was also to give a 5 percent discount for services like catering and use of waiting rooms, if purchased digitally.
People who paid digitally or used prepaid cards got a 10 percent discount at toll plazas on highways.
Also, a waiver of service tax on the use of credit or debit card for payments up to Rs 2,000 was announced then. A 15 percent tax was charged on such transactions in December 2016.
It wasn't immediately known if all of these discounts have since been withdrawn.
In December 2017, the government announced that it will bear the MDR charges on transactions up to Rs 2,000 made through debit cards, BHIM UPI or Aadhaar-enabled payment systems to promote digital transactions.
It was also announced that the merchant discount rate (MDR) will be borne by the government for two years with effect from January 1, 2018 by reimbursing the same to the banks.(With inputs from PTI)The Great Diwali Discount!
Unlock 75% more savings this festive season. Get Moneycontrol Pro for a year for Rs 289 only.
Coupon code: DIWALI. Offer valid till 10th November, 2019 .