Why is UPI trending in India today?
The government’s 0.4% merchant discount rate (MDR) on UPI transactions over ₹2,000, slated to start after Diwali, is causing small businesses, especially hotels, to stop accepting such payments. This has sparked public debate and media coverage.
What happened
- Earlier
The Reserve Bank announced that the MDR on UPI transactions above ₹2,000 will be deferred until after Diwali [1]
- 13 Oct, 2026
Kerala Hotel and Restaurant Association said its members will stop accepting UPI payments above ₹2,000 from 15 Oct [2]
What you need to know
The MDR is set at 0.4% of the transaction value.
It applies only to UPI payments exceeding ₹2,000.
Businesses fear the extra cost will hurt margins, especially amid rising raw‑material prices.
Some industry groups are urging the limit to be raised to ₹10,000 or the charge to be removed.
It is not yet clear whether the government will adjust the ₹2,000 threshold or modify the MDR after industry pushback.
Background
The Reserve Bank of India introduced a merchant discount rate of 0.4% for UPI transactions above ₹2,000 to generate revenue from digital payments. Initially planned for immediate rollout, the implementation has been postponed until after the Diwali festival.
The Kerala Hotel and Restaurant Association (KHRA) announced that its members will refuse UPI payments above the ₹2,000 limit from 15 October, citing the new MDR as an additional financial burden on small establishments already facing high raw‑material costs.
KHRA leaders have called for either scrapping the extra charge or raising the transaction limit to ₹10,000 to alleviate pressure on the hospitality sector.
Questions people ask
What is the merchant discount rate (MDR) for UPI?
It is a 0.4% fee charged to merchants on UPI transactions that exceed ₹2,000.
Why are hotels refusing UPI payments above ₹2,000?
They say the MDR adds a cost they cannot absorb, especially with rising input prices.
When will the new MDR take effect?
The rollout has been deferred to after Diwali, with some businesses acting early from 15 October.
Where this came from
[1] timesofindia.indiatimes.com
MDR on UPI transactions over Rs 2,000 deferred; to come into effect post Diwali
Preview image from timesofindia.indiatimes.com
[2] thehindu.com
MDR on UPI: Keralam hotels association says will stop accepting UPI payments above ₹2,000 from October 15
Preview image from thehindu.com
Found through Google Trends and drafted with AI from at least two cited sources. Published automatically after passing our automated checks for sources, wording and safety. It may not have been reviewed by a person yet. Report a correction.