Kerala hotels and restaurants will stop accepting Unified Payments Interface (UPI) payments above ₹2,000 from October 15, protesting the proposed merchant discount rate (MDR) on digital transactions.
The Kerala Hotel and Restaurant Association (KHRA) announced the move, citing the financial burden the proposed 0.4% MDR framework would place on small businesses, particularly hotels, restaurants, and lodges.
Key Takeaways
- Kerala hotels and restaurants stop accepting UPI payments above ₹2,000
- Proposed MDR charges could have a negative impact on digital payments in Kerala
- NPCI defers implementation of MDR charges until after Diwali
- Merchants and businesses in Kerala protest against proposed MDR charges
- Government and NPCI to address concerns of merchants and businesses in the state
Who is affected by the new slab
Customers making payments exceeding ₹2,000 would have to use cash at participating establishments, KHRA president G. Jayapal said.
The industry is already suffering from the rising cost of raw materials, and the proposed MDR would put an additional financial burden on businesses, Jayapal added.
What the 0.4% cap changes for merchants
The proposed MDR framework would increase the financial burden on small businesses, particularly hotels, restaurants, and lodges, Jayapal said.
The association's proposed move is aimed at opposing the introduction of merchant charges on UPI transactions, with Jayapal suggesting that either the extra charges should be scrapped or the limit should be raised to ₹10,000 from ₹2,000.
By the numbers
- ₹2,000: the threshold above which UPI payments will not be accepted
- 0.4%: the proposed merchant discount rate on digital transactions
- ₹300: the capped MDR for transactions of ₹75,000 or more
NPCI's decision to defer implementation
The National Payments Corporation of India (NPCI) announced that the implementation of the proposed 0.4% MDR on transactions exceeding ₹2,000 had been deferred.
A revised implementation date would be decided after Diwali, the NPCI said.
Protests against the proposed MDR charges
Members of trade organisations in Ernakulam organised a torch march across the city, demanding the withdrawal of the proposed UPI MDR charges.
The KHRA and other trade organisations argue that additional payment costs could affect businesses and discourage the use of digital payment methods.
Impact on digital payments in Kerala
The proposed MDR charges have sparked concerns among traders and businesses in Kerala, who fear that the additional costs could affect their already thin profit margins.
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The KHRA's decision to stop accepting UPI payments above ₹2,000 is seen as a protest against the proposed charges, which could have far-reaching implications for the digital payments landscape in Kerala.
Expert perspective
Experts say that the proposed MDR charges could have a negative impact on the adoption of digital payments in Kerala, particularly among small businesses and merchants.
The charges could also lead to a shift towards cash-based transactions, which could undermine the government's efforts to promote digital payments and reduce cash transactions.
Implications for the digital payments industry
The proposed MDR charges could have significant implications for the digital payments industry in India, particularly for small businesses and merchants who rely heavily on digital transactions.
The charges could lead to a decline in digital payments, which could have a negative impact on the economy and the government's efforts to promote digital payments.
What to expect next
The NPCI's decision to defer the implementation of the proposed MDR charges has provided temporary relief to merchants and businesses in Kerala.
However, the issue is far from resolved, and it remains to be seen how the government and the NPCI will address the concerns of merchants and businesses in the state.
Frequently Asked Questions
What is the proposed merchant discount rate on UPI payments?
The proposed merchant discount rate is 0.4% on transactions exceeding ₹2,000.
Why are Kerala hotels and restaurants stopping UPI payments above ₹2,000?
They are protesting the proposed merchant discount rate, which they say will increase their financial burden.
What is the impact of the proposed MDR charges on digital payments in Kerala?
The proposed MDR charges could lead to a decline in digital payments and a shift towards cash-based transactions.
