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 stay free of charge.

The change only affects larger payments. It marks a shift 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 person-to-merchant payments, not to all UPI transactions.

The government and the central bank have weighed the move for some time. The idea is to cover the cost of big digital transactions. 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 change that. The reported rate is not as high as anticipated. It remains unclear how quickly the charge will roll out. Consumers using UPI for small purchases will see no difference.