According to a report, the accused Radha had a 'professional rivalry' with the 38-year-old victim Shalini.
The differences between the two ladies grew as Shalini was charging Rs 500 to Rs 1000 per customer while Radha used to charge between Rs 300 to Rs 500.
"Yesterday Radha agreed to have committed the crime, when she was subjected to detailed police interrogation," said the police.
Radha agreed to have committed the crime but did not want to kill Shalini.
Kottayam West Police, who arrested Radha, said that she was a drunkard with criminal background and used to fleece her customers in the dark of the night.
Shalini, a mother of two and a native of Pathanamthitta, died in hospital on Friday as Radha had poured half-a-litre acid on her face and stomach. Some acid even went into her mouth that caused further serious injuries.
A senior police official said, "Radha had no intention to kill Shalini, only disfigure her."
Radha, who hails from Thiruvananthapuram, was living in a rented house in Kanjikkuzhi in Kottayam.
She had been running prostitution racket in Kottayam since last 10 years.