India is introducing fees on large UPI payments. A merchant discount rate of 0.4% will apply to some person-to-merchant payments above Rs 2,000. Reports say the fee won't be passed to customers. Smaller UPI payments stay free of charge.

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, as reports indicate. The fee applies to payments from people to merchants, 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 long asked for such a charge. The current system has no fee for most UPI payments. A fee on larger merchant payments would change that. The reported rate is below earlier estimates. It remains unclear whether the fee will be phased in. Consumers using UPI for small purchases should not notice any change.