Diners in Keralam may have to carry cash for bills exceeding ₹2,000 from October 15 to make their payments. 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 charges.
According to the association, the introduction of a 0.4% merchant discount rate (MDR) on bills would increase the financial burden on small establishments.
KHRA president G Jayapal said that the industry is already struggling with rising raw material costs. We feel cheated, especially since we were encouraged to adopt digital payments and are now being charged extra for them. This will add to our financial burden and push the industry further into crisis.
In a joint statement, Jayapal and KHRA general secretary N. Abdul Razak said UPI payments were widely used across the hotel and restaurant industry, and additional charges would affect businesses, particularly hotels and lodges. The association demanded that the charges be scrapped or the transaction limit be raised to ₹10,000 from ₹2,000.
The Kerala Vyapari Vyavasayi Ekopana Samithi already announced a boycott of UPI transactions on October 15 to protest against the Centre’s move to impose charges.
Raju Apsara, state president, said small traders had widely adopted UPI following the Centre’s push for digital transactions. The proposed 0.4% charge, along with GST on such transactions, would impose an additional burden on traders, he said.
With profit margins already constrained by intense competition, the additional fee on every transaction would raise operating costs and aggravate the financial difficulties faced by the sector, he added.
The Kerala Textile and Garments Association has also warned that UPI charges could fuel inflation and encourage merchants to return to cash transactions.
According to T. S. Pattabhiraman, State president, the fee applied at every stage of the supply chain from manufacturer to retailer, could cumulatively push up prices for consumers.
Wholesalers and retailers typically operate on net profit margins of 1–5%, he said, adding that a 0.4% fee on gross turnover could consume 10–25% of a merchant’s net profit. Such erosion of margins could prompt traders to revert to cash transactions, reversing the progress made in digital payments, he added.
Published on October 13, 2026
