The Kerala Hotel and Restaurant Association (KHRA) announced on October 13 that its members will stop accepting Unified Payments Interface (UPI) payments above ₹2,000 starting October 15. This move is in protest against the proposed 0.4% merchant discount rate (MDR) on digital transactions, which KHRA says will increase financial burdens on small businesses in the hospitality sector, according to livemint.com.
KHRA president G. Jayapal said the proposed MDR framework would impose extra costs on hotels, restaurants, and lodges, many of which operate on thin margins. Jayapal highlighted that the industry is already struggling with rising raw material prices and that the additional charges on digital payments feel like a betrayal after being encouraged to adopt digital methods. The association's decision aims to oppose the introduction of merchant charges on UPI transactions, urging either the scrapping of these charges or government intervention.
The association's concerns reflect wider apprehensions in the hospitality sector about the financial impact of MDR on digital payments. UPI has become a widely used payment method across hotels and restaurants, but the new charges could discourage its use and push customers towards cash payments for transactions above ₹2,000. This could affect the digital payment ecosystem and the operational efficiency of small businesses in Kerala's hospitality industry.
KHRA president G. Jayapal and general secretary N. Abdul Razak jointly issued the statement opposing the MDR charges. The policy will take effect on October 15, when participating establishments will begin refusing UPI payments exceeding ₹2,000, requiring customers to pay in cash for higher amounts.