Kerala Hotels Restrict UPI Transactions as Merchant Charges Row Intensifies

Hospitality establishments in Kerala have started limiting Unified Payments Interface transactions to ₹2,000, effectively circumventing newly introduced merchant charges that have triggered widespread concern across the service sector. The restriction reflects growing discontent among merchants over additional costs associated with digital payment processing.

The National Payments Corporation of India had announced the merchant charges as part of efforts to revise its pricing structure for UPI transactions. However, facing pushback from businesses and consumer groups, NPCI has deferred the full rollout of the fees beyond the Diwali period, providing temporary relief to the affected merchant community.

Hotels and other businesses across the state have adopted the ₹2,000 cap as a workaround, requiring customers to make multiple transactions or resort to alternative payment methods for bills exceeding the limit. The practice has raised questions about the practicality of enforcing such charges on small and medium-sized merchants already operating on thin margins.

The standoff highlights the tension between regulatory push for digitalization and merchant concerns about sustainability. Industry associations have urged NPCI to reconsider the fee structure, arguing that additional charges on digital payments could reverse the momentum of India's shift toward cashless transactions, particularly in smaller establishments.