Diners in Keralam may need to carry cash for bills exceeding ₹2,000 from October 15 to pay. The move follows the decision announced by the Kerala Hotel and Restaurant Association (KHRA) to stop accepting UPI payments above the threshold in protest against the proposed transaction fees.
According to the association, the introduction of the merchant discount rate (MDR) of 0.4% on bills will increase the financial burden on small companies.
KHRA president G Jayapal said the industry has been struggling with the rising cost of raw materials. We feel cheated, especially since we are encouraged to use digital payments and are now being charged extra. This will increase the financial burden and push the industry into crisis.
In a joint statement, Jayapal and KHRA secretary general N. Abdul Razak said UPI payments are widely used in the hotel and restaurant industry, and the additional charges will affect businesses, especially hotels and lodges. The association demanded that the charges be withdrawn or the transaction limit raised to ₹10,000 from ₹2,000.
The Kerala Vyapari Vyavasayi Ekopana Samithi has announced a boycott of UPI transactions on October 15 in protest against the Centre’s move to impose charges.
Raju Apsara, the country’s president, said small traders have been using UPI after the Center’s push for digital transactions. The proposed 0.4% charge, along with GST on such transactions, will increase the burden on traders, he said.
With profit margins already limited by strong competition, additional fees on each transaction will increase operating costs and increase the financial difficulties facing the sector, he said.
The Kerala Textile and Garment Association also warned that UPI charges could lead to inflation and encourage traders to revert to cash transactions.
According to TS Pattabhiraman, the country’s president, the cost imposed at each stage of the supply chain from the manufacturer to the retailer, can cumulatively increase consumer prices.
Wholesalers and retailers typically operate on a 1-5% profit margin, he said, adding a 0.4% fee to gross turnover can consume 10-25% of a trader’s net profit. That margin erosion could push merchants back to cash transactions, reversing the progress made in digital payments, he added.
Published on October 13, 2026