India, Sept. 16 -- Shops and businesses in India will pay a fee of 0.4% of the payment, capped at Rs.300, on UPI payments above Rs.2,000 from October 15. The change ends more than six years in which the country's most widely used payment system cost merchants nothing.

Customers are not meant to pay this fee, the finance ministry said in a statement on September 15, although in practice, that would depend on whether the merchant decides to pass on the additional cost or absorb it. Transfers between individuals stay free whatever the amount. The ministry said such direct transfers - peer-to-peer - make up 37% of UPI transactions by number and 70% by value.

Several other categories are also exempt, including for small shops and recurring a...