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 won't be passed to customers. Smaller UPI payments keep their no-fee status.

The change targets larger transactions only. 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, according to reports. The fee applies to transactions between customers and businesses, 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 would change that. The reported rate is below earlier estimates. It remains unclear how quickly the charge will roll out. Consumers using UPI for small purchases should not notice any change.