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 only affects larger payments. 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, according to reports. 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 make large digital payments sustainable. Banks and payment firms have repeatedly sought such a charge. The current system has a zero-cost model for most users. 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.