KARACHI: After weeks of deliberations between the government and petroleum dealers, the State Bank of Pakistan (SBP) has announced a significant reduction in the Merchant Discount Rate (MDR) charged on card payments at petrol pumps, a step expected to ease financial pressure on dealers and encourage digital transactions.
According to a circular issued on Monday, the SBP has capped the MDR at one rupee per litre for card transactions at fuel stations. Formal instructions have been dispatched to all banks to implement the revised fee structure immediately.
The Pakistan Petroleum Dealers Association (PPDA) welcomed the decision, describing it as a “big relief” for the sector. The association noted that previously a 0.8 per cent MDR was levied on petrol sales, translating to nearly three rupees per litre at current fuel prices. The new cap, they said, would substantially reduce costs for dealers while making card payments more viable.
Industry observers believe the measure could help expand Pakistan’s digital payments footprint, particularly in the retail fuel sector where cash transactions dominate. Dealers argue that the earlier MDR structure discouraged card usage, as margins were already squeezed by rising operational costs and volatile fuel pricing.
The SBP’s intervention comes amid broader efforts to stabilize the petroleum supply chain and modernize payment systems. Analysts say the move reflects the regulator’s attempt to balance financial inclusion goals with the operational realities of one of the country’s most sensitive consumer markets.
