India is opening the door to fees on large UPI payments. A merchant discount rate of 0.4% will apply to some person-to-merchant payments above Rs 2,000. Reports say the fee won't be passed to customers. Smaller UPI payments remain free.

The change targets larger transactions only. It marks a shift from the current no-fee structure. The new rate applies only to payments that surpass the Rs 2,000 mark. Consumers are not charged the fee, based on current reporting. The fee applies to transactions between customers and businesses, not to all UPI transactions.

The government and the central bank have weighed the move for some time. The idea is to support the payments ecosystem. Banks and payment firms have pushed for such a charge. The current system has a zero-cost model for most users. A fee on larger merchant payments could reshape the market. The reported rate is lower than some had expected. It remains unclear when the fee will start. Consumers using UPI for small purchases face no extra cost.