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 will not hit consumers. Smaller UPI payments keep their no-fee status.

The change targets larger transactions only. It marks a departure 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, as reports indicate. The fee applies to transactions between customers and businesses, 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 whether the fee will be phased in. Consumers using UPI for small purchases should not notice any change.