Credit card company SBI Card, a joint venture between SBI and private equity firm Carlyle, has informed customers that it is doing away with cashback on fuel transactions. This marks a u-turn since cashback on fuel purchases was introduced by the government to promote digital payments after demonetisation in November 2016.
For many customers of the second-largest credit card issuer in the country, the cashback on fuel transactions is a major attraction. The card company attributes the decision to stop cashback on fuel transaction on PSU oil companies.
“Dear SBI Credit Cardholder, as advised by Public Sector Oil Marketing Companies, the 0.75% Cashback on fuel transactions will be discontinued w.e.f 1 Oct’19.T&C,” says a message for customers from the credit card company. The discount is credited to the buyer’s account within 3-4 days of the transaction.
Reports say that the oil marketing companies have told banks to discontinue the cashback for only credit card users from October. IOCL, BPCL, and HPCL give a cashback equivalent to 0.75% of the value of fuel purchased using credit and debit cards and e-wallets. It seems that PSU oil marketing companies are no longer willing to bear the cost of the cashback i.e. discount.
Readers should not confuse cashback on fuel transactions and fuel surcharge waiver. Credit cards continue to offer waiver of 1-3% fuel surcharge at any pump any place. Fuel surcharge waiver does not mean that you pay less on your fuel purchase. It just means a reduced amount of the transaction fee for using the credit card.