India is moving toward 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 focuses only on bigger transactions. It marks a departure 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, based on current reporting. The fee applies to person-to-merchant payments, not to all UPI transactions.

The government and the central bank have been discussing the move for some time. The idea is to cover the cost of big digital transactions. 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 not as high as anticipated. It remains unclear whether the fee will be phased in. Consumers using UPI for small purchases should not notice any change.