India is opening the door to 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 hit 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 eligible payments above the Rs 2,000 threshold. Consumers are not charged the fee, as reports indicate. The fee applies to person-to-merchant payments, not to all UPI transactions.

The government and the central bank are considering the move for some time. The idea is to support the payments ecosystem. Banks and payment firms have repeatedly sought such a charge. The current system has no fee for most UPI payments. A fee on larger merchant payments could reshape the market. The reported rate is below earlier estimates. It remains unclear how quickly the charge will roll out. Consumers using UPI for small purchases should not notice any change.