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 will not be charged to consumers. Smaller UPI payments remain free.

The change targets larger transactions only. It marks a change 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 have been discussing the move for some time. The idea is to support the payments ecosystem. Banks and payment firms have pushed for 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 not as high as anticipated. It remains unclear when the fee will start. Consumers using UPI for small purchases face no extra cost.