India is moving toward fees on large UPI payments. A merchant discount rate of 0.4% will kick in for some person-to-merchant payments above Rs 2,000. Reports say the fee will not be charged to consumers. Smaller UPI payments remain free.

The change only affects larger payments. It marks a shift from the current no-fee structure. The new rate applies only to qualified transactions over Rs 2,000. Consumers are not charged the fee, according to reports. 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 long asked for such a charge. The current system has no fee for most UPI payments. A fee on larger merchant payments would alter the landscape. The reported rate is below earlier estimates. It remains unclear whether the fee will be phased in. Consumers using UPI for small purchases will see no difference.