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 stay free of charge.

The change focuses only on bigger transactions. 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 cover the cost of big digital transactions. Banks and payment firms have repeatedly sought such a charge. The current system has no charge on most UPI transactions. A fee on larger merchant payments would alter the landscape. The reported rate is below earlier estimates. It remains unclear when the fee will start. Consumers using UPI for small purchases should not notice any change.