May 21, 2025 · 10 mins read
Santosh Kumar
Imagine rolling up to a fuel station, paying for petrol or diesel by swiping your credit card, only to find you've got an additional charge on your bill that you did not expect. This can be confusing, can’t it? That little extra amount is called a fuel surcharge on credit card payments and is often a surprise.
You are not alone. There are many credit cardholders that are confused about this extra charge when they are filling up their vehicles. It is a minor amount but can accumulate over time, particularly for those who travel extensively or when you use a personal vehicle for your daily work commutes or other outings.
Understanding what is fuel surcharge on credit card billing can assist you to create more adequate planning, choose a card more suitable for you, and in some cases even eliminate the needless expense.
In this blog, we are going to discuss everything you need to know about the fuel surcharge on credit card transactions — what it is, why it’s charged, the amount it generally costs and how to generally avoid paying it using various financial behaviours.
Essentially, a fuel surcharge on a credit card is an extra fee applied when you pay for fuel at a petrol station or gas station with a credit card. The fuel surcharge is not the cost of the fuel — it is a processing fee applied by the bank or card network to complete the transaction.
Typically, fuel surcharges are around 1% to 3% of the total transaction amount. This isn't a lot to pay in one chunk, but it certainly adds up when you fill your tank on a fairly regular basis.
Now that you understand what is fuel surcharge on credit card statements means, you might now be asking yourself -- why even charge this fee to begin with, from the standpoint of banks or in the case of fuel stations?
Credit card transactions have processing costs incurred by the merchant. Because most fuel stations work with low margins of profit, absorbing credit card transaction costs may impact their bottom line. So this surcharge is passed along to the customer.
Banks charge a fuel surcharge fee to help cover the cost of infrastructure, processing, and fraud prevention involved with credit card transactions.
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Here’s what is included in the fuel surcharge on credit card transactions:
Merchant Discount Rate (MDR): This is what merchants (fuel stations) pay to banks in order to accept credit card payments. This is the foundation for the fuel surcharge.
GST on the Surcharge: Usually, Goods & Services Tax will be levied on the surcharge, thus increasing the total price.
Card Network Charges: A card network charge is imposed by Visa, MasterCard or RuPay in order to recuperate its charges from routing and authorizing the transaction.
In other words, the question 'what is fuel surcharge on a credit card' leads to an answer: it is a group of several hidden backend charges combined into one.
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The actual rate of the fuel surcharge on credit cards depends on several factors:
Card Type: Basic Credit Cards Surcharge Rate: 1% – 2.5% Waiver Available?: Rarely
Card Type: Co-branded Fuel Cards Surcharge Rate: 0% – 1% Waiver Available?: Usually Yes
Card Type: Premium Cards Surcharge Rate: Varies Waiver Available?: Often Available
Most banks typically charge around 2.5% as the standard fuel surcharge on credit card, with GST added on top, making it roughly 2.95% in total.
If you are a frequent driver or someone who uses a vehicle daily for commuting, using a credit card with a fuel surcharge on credit card waiver can lead to considerable savings over time. Fuel prices are rising, and given that even a 2.5% surcharge may add up to several thousand rupees in a year. Fortunately, there are a number of fuel-specific credit cards in India that are specifically designed to eliminate or mitigate this burden.
These are usually co-branded cards that were designed and issued by banks in collaboration with fuel companies such as HPCL (Hindustan Petroleum), IOCL (Indian Oil), or BPCL (Bharat Petroleum).These co-branded cards offer waivers, cashback, or reward points, value add that are only applicable for fuel transactions.
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Let's review a few examples:
1. HPCL SBI Credit Card: 1% fuel surcharge waiver on petrol card transactions of up to ₹4,000 from HPCL fuel stations. You can also earn reward points on fuel spends and redeem them for fuel as well.
2. IndianOil Citi Credit Card: Suitable for people who frequently fill up at IOCL outlets, this card offers 1% fuel surcharge waiver and turbo points on every fuel purchase as well as discounts on partner services as well.
3. ICICI HPCL Coral Credit Card: For a 1% waiver at HPCL stations, users can enjoy accelerated PAYBACK points on fuel spends and other discounts at dining or entertainment outlets.
4. Axis Bank IndianOil Credit Card: Daily commuters availing benefits of 4% value back on fuel spends and surcharge waivers at IOCL stations, these fuel reward cards are the most popular for your daily traverses.
5. Standard Chartered Super Value Titanium Card: Offers 5% cashback (which includes the fuel surcharge) whenever you spend on fuel; it's another strong option for drivers on the road constantly.
No one enjoys paying additional fees, especially for something as ordinary as filling up their vehicle. Fortunately, there are ways to avoid or limit the fuel surcharge on credit card transactions if you're willing to be resourceful and plan ahead.
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Here are several effective tips:
As noted above, several cards will provide a fuel surcharge waive when doing so. This is the most straightforward and effective method to get the fuel surcharge waived.
There are even cards that are work with fuel only with participating partner stations. You would want to look for cards that are designed for fuel purchases and use them often.
There are also many banks that have a limited transaction amount for waiver of the fuel surcharge on credit card only. Most often, it is the fuel surcharge waiver is applicable for transactions between ₹400 and ₹5,000.
Other transactions outside the range will not be eligible for surcharge waiving, so try to keep your fuel transaction limited to the maximum eligible amount in your bank.
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If your card has a waiver for the fuel surcharge, then most likely they have partnerships with only a few oil companies/brands like HPCL, IOCL or BPCL. Make sure you fill fuel only at the partner stations to be able to use the waiver. Sometimes the surcharge may apply still!
While debit cards may sometimes have soar charges, most of the time they don't. And a lot of UPI transactions don't have fuel surcharge charges. If the fuel station allows UPI or debit card payments, then use them so you don't pay the surcharge.
Some credit cards allow users to redeem previously earned reward points or cashback to reduce the fuel surcharge for credit card payments. If your credit card provider allows you to do this, take advantage of it.
Some cards offer limited waivers - like just the first 3 or 5 fuel transactions per billing cycle. If you time your refuels or if you bulk refuel, then you may be able to maximize the waiver within your card’s limits.
The bottom line: The more you know about what is fuel surcharge is on credit card payments and the more mindful you are with how you transact, the more you will save in the long run.
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Even if you have a credit card that offers fuel surcharges on credit card waivers, there are things you should always look for to ensure you use it appropriately.
Most cards will not offer unlimited waivers. Their monthly limit will often somewhere between free Rs.100 or Rs.250 in total for all waivers taken in that billing cycle. If you exceed the limit, the charge above that will often not be reimbursed.
Except for certain cards like the HDFC 5% cb on fuel purchases, Waivers will only apply to fuel purchases that fall between a certain value — usually in the range of Rs.400 to Rs.4,000 Rs.5,000. Any purchase below or above that limit is not eligible for a fuel surcharge, meaning the fee will often be payable by you.
Waivers are generally limited to purchases that are made at a gas station using Merchant TP (i.e., Merchant Category Codes). If the station you bought the fuel at falls into an MCC different than fuel, then your credit provider might not recognise it as fuel.
When the card provider calls a base fuel surcharge on credit card waiver exempt, the GST (usually 18%) charged on that surcharge is often not exempt. This is a small amount to be concerned about, but worth accounting for.
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A: The fuel surcharge is a fee (typically 1%-3%) that banks charge when you pay for your fuel with a credit card to cover transaction costs and their network fees.
A: Most credit cards will impose a fuel surcharge. However, some cards do not or have a partial waiver. Co-branded fuel cards are also known to have fuel surcharge waivers based on conditions of use.
A: Yes, you can use credit cards that offer surcharge waivers, use one of their partner fuel stations, or opt to pay with UPI/debit cards.
A: Since the fuel surcharge is a fee for a service, there will also be GST applied to it (usually 18%), which will also slightly increase the total charges applied.
A: Normally no. The fuel surcharge is only generally affixed to credit cards, mostly because it is a higher cost to the bank to process.
A: No, some petrol pumps will still charge their full fuel surcharge, whereas your credit card offers a waiver; always check before transacting.
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