Small traders in Kerala have announced a boycott of UPI transactions on October 15 in opposition to new charges introduced by the government, citing increased operational costs amid growing digital adoption.
The Kerala Vyapari Vyavasayi Ekopana Samithi has said it will suspend UPI payments across Kerala on October 15, escalating a dispute over the Union government’s decision to bring certain merchant transactions into a chargeable framework. State president Raju Apsara said the move would hit small traders hardest at a time when margins are already thin and competition is intense.
According to reports in the Indian media, the government has said a 0.4% merchant discount rate will apply to person-to-merchant UPI payments above Rs 2,000 from that date, while consumer-to-consumer transfers will remain free. The charge is not meant to be paid by users at the till, but will instead be collected within the merchant payments ecosystem.
The government has also said the fee will help support investment in UPI infrastructure, cyber security, innovation and customer service. For low-margin and essential sectors, including railways, telecoms, insurance, fuel and agricultural inputs, a flat MDR of Rs 5 will apply to qualifying payments above the threshold, according to the reports.
Traders in Kerala say the change amounts to a fresh cost burden on businesses that were encouraged to adopt digital payments in the first place. Apsara said the Samithi would mobilise small traders across the state in protest, arguing that a fee on each transaction, together with GST, would worsen operating costs and deepen pressures already felt across the sector.
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