Oil Marketing Companies (OMCs) have requested the State Bank of Pakistan (SBP) to revise the bank charges from 1.5 percent to 0.3 percent on the sale of petroleum products through credit and debit cards.
In this regard, the representative body of OMCs, the Oil Companies Advisory Council (OCAC), has written a letter to the SBP for a review of the bank charges known as the merchant discount rate (MDR).
Banks and switch operators charge on average 1.5 percent at petrol pumps while the cost is being borne by the OMCs and their dealers (petrol pump owners and operators) on the transactions made for the customers via debit and credit cards.
The charges are reducing the margins of OMCs and their dealers and the current level of MDR being charged on fuel transactions is not sustainable for the industry.
The letter also mentions that fuel (motor gasoline and diesel) prices, including the OMCs and dealers’ margins, are regulated by the government and the margins are fixed on an absolute basis, not on the basis of the percentage of the final selling prices.
The OCAC has recommended to the SBP Governor that MDR on fuel purchased must be capped at 0.3 percent in order to promote the use of digital payments.
It is pertinent to note that various petrol pumps have discontinued the payment facility for customers through debit and credit cards due to this issue.
If govt knows this is the most right time to implement RAAST.
It is a very reasonable and logical suggestion by the OMCs. People now don’t use debit cards that much for purchasing fuel. With lower margins of Banks, fuel pumps will facilitate more transactions through debit cards thereby increasing profit of banks through increased transactions, benefiting all.