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 stay free of charge.

The change targets larger transactions only. It marks a change 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 payments from people to merchants, not to all UPI transactions.

The government and the central bank are considering the move for some time. The idea is to make large digital payments sustainable. Banks and payment firms have repeatedly sought such a charge. The current system has no charge on most UPI transactions. 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 face no extra cost.