India is opening the door to fees on large UPI payments. A merchant discount rate of 0.4% will be applied to some person-to-merchant payments above Rs 2,000. Reports say the fee will not hit consumers. Smaller UPI payments remain free.

The change focuses only on bigger transactions. It marks a change from the current no-fee structure. The new rate applies only to qualified transactions over Rs 2,000. Consumers are not charged the fee, based on current reporting. The fee applies to payments from people to merchants, not to all UPI transactions.

The government and the central bank have been discussing the move for some time. The idea is to make large digital payments sustainable. 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 would alter the landscape. The reported rate is lower than some had expected. It remains unclear when the fee will start. Consumers using UPI for small purchases will see no difference.