India is opening the door to 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 only affects larger payments. 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 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 make large digital payments sustainable. Banks and payment firms have pushed for such a charge. The current system has no charge on most UPI transactions. 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 will see no difference.