India is opening the door to 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 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, according to reports. The fee applies to person-to-merchant payments, not to all UPI transactions.

The government and the central bank have weighed the move for some time. The idea is to support the payments ecosystem. 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 lower than some had expected. It remains unclear how quickly the charge will roll out. Consumers using UPI for small purchases should not notice any change.