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 won't be passed to customers. Smaller UPI payments remain free.

The change only affects larger payments. 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, based on current reporting. The fee applies to transactions between customers and businesses, 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 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 lower than some had expected. It remains unclear whether the fee will be phased in. Consumers using UPI for small purchases face no extra cost.