Kerala Hotels to Halt UPI Payments Over ₹2,000 Starting October 15

The Kerala Hotel and Restaurant Association (KHRA) has declared that its members will cease accepting UPI payments exceeding ₹2,000 starting October 15, 2026. This decision comes in response to the recent implementation of a 0.4% merchant discount rate (MDR) on UPI transactions, which the association argues will impose an additional financial strain on smaller businesses.

KHRA president G. Jayapal emphasized that the hospitality sector is already grappling with escalating raw material costs. He expressed feelings of betrayal, noting that businesses were previously encouraged to adopt digital payment methods, only to face extra charges now. "This will plunge us further into a financial crisis," he stated, highlighting the precarious situation many establishments find themselves in.

In a joint statement, Jayapal and KHRA general secretary N. Abdul Razak pointed out that UPI is a prevalent payment method within the hotel and restaurant industry. They voiced concerns that the additional charges for digital transactions would adversely impact hotels and lodges, which rely heavily on UPI for customer payments. Jayapal suggested that either the extra charges should be eliminated or the payment limit should be increased to ₹10,000.

The implications of this decision are significant for the hospitality sector in Kerala, where many establishments have embraced digital payments to enhance customer convenience. The KHRA's stance reflects broader concerns about the sustainability of small businesses in the face of rising operational costs and now, additional transaction fees.

Looking ahead, the KHRA plans to engage with relevant authorities to discuss the potential for revising the MDR framework. The association aims to advocate for a more favorable environment for its members, ensuring that small businesses can continue to thrive without the burden of excessive fees.