India is moving toward 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 will not hit consumers. Smaller UPI payments remain free.

The change targets larger transactions only. It marks a departure from the current no-fee structure. The new rate applies only to qualified transactions over Rs 2,000. 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 are considering the move for some time. The idea is to make large digital payments sustainable. Banks and payment firms have long asked for such a charge. The current system has no charge on most UPI transactions. A fee on larger merchant payments could reshape the market. The reported rate is below earlier estimates. It remains unclear how quickly the charge will roll out. Consumers using UPI for small purchases will see no difference.