India is moving toward fees on large UPI payments. A merchant discount rate of 0.4% will be applied to some person-to-merchant payments above Rs 2,000. Reports say the fee won't be passed to customers. Smaller UPI payments keep their no-fee status.

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, as reports indicate. The fee applies to payments from people to merchants, not to all UPI transactions.

The government and the central bank are considering 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 would change that. 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.