diff --git a/includes/admin/class-wc-rest-upe-flag-toggle-controller.php b/includes/admin/class-wc-rest-upe-flag-toggle-controller.php
index 4234c87433c..37cd3958f26 100644
--- a/includes/admin/class-wc-rest-upe-flag-toggle-controller.php
+++ b/includes/admin/class-wc-rest-upe-flag-toggle-controller.php
@@ -117,12 +117,17 @@ private function update_is_upe_enabled( WP_REST_Request $request ) {
 		$is_upe_enabled = $request->get_param( 'is_upe_enabled' );
 
 		if ( $is_upe_enabled ) {
-			update_option( WC_Payments_Features::UPE_FLAG_NAME, '1' );
+			update_option( WC_Payments_Features::UPE_SPLIT_FLAG_NAME, '1' );
 			return;
 		}
 
-		// marking the flag as "disabled", so that we can keep track that the merchant explicitly disabled it.
-		update_option( WC_Payments_Features::UPE_FLAG_NAME, 'disabled' );
+		// If the legacy UPE flag has been enabled, we need to disable the legacy UPE flag.
+		if ( '1' === get_option( WC_Payments_Features::UPE_FLAG_NAME ) ) {
+			update_option( WC_Payments_Features::UPE_FLAG_NAME, 'disabled' );
+		} else {
+			// marking the flag as "disabled", so that we can keep track that the merchant explicitly disabled it.
+			update_option( WC_Payments_Features::UPE_SPLIT_FLAG_NAME, 'disabled' );
+		}
 
 		// resetting a few other things:
 		// removing the UPE payment methods and _only_ leaving "card",
diff --git a/includes/class-wc-payments-account.php b/includes/class-wc-payments-account.php
index 177a7ea958f..f64ea0f850a 100644
--- a/includes/class-wc-payments-account.php
+++ b/includes/class-wc-payments-account.php
@@ -1073,6 +1073,9 @@ private function finalize_connection( $state, $mode ) {
 		// user might not have agreed to TOS yet.
 		update_option( '_wcpay_onboarding_stripe_connected', [ 'is_existing_stripe_account' => false ] );
 
+		// Automatically enable split UPE for new stores.
+		update_option( WC_Payments_Features::UPE_SPLIT_FLAG_NAME, '1' );
+
 		wp_safe_redirect(
 			add_query_arg(
 				[
diff --git a/includes/migrations/class-track-upe-status.php b/includes/migrations/class-track-upe-status.php
index 2cf41be2263..4456ae98841 100644
--- a/includes/migrations/class-track-upe-status.php
+++ b/includes/migrations/class-track-upe-status.php
@@ -31,7 +31,7 @@ public static function maybe_track() {
 			return;
 		}
 
-		$upe_value = get_option( \WC_Payments_Features::UPE_FLAG_NAME, 'not-set' );
+		$upe_value = get_option( \WC_Payments_Features::UPE_SPLIT_FLAG_NAME, 'not-set' );
 
 		// Don't trigger the track event when the flag isn't set.
 		if ( 'not-set' !== $upe_value ) {
diff --git a/includes/notes/class-wc-payments-notes-additional-payment-methods.php b/includes/notes/class-wc-payments-notes-additional-payment-methods.php
index a1d09787081..fe093959e27 100644
--- a/includes/notes/class-wc-payments-notes-additional-payment-methods.php
+++ b/includes/notes/class-wc-payments-notes-additional-payment-methods.php
@@ -120,7 +120,7 @@ public static function maybe_enable_upe_feature_flag() {
 		}
 
 		// Enable UPE, deletes the note and redirect to onboarding task.
-		update_option( WC_Payments_Features::UPE_FLAG_NAME, '1' );
+		update_option( WC_Payments_Features::UPE_SPLIT_FLAG_NAME, '1' );
 		self::possibly_delete_note();
 
 		$wcpay_settings_url = admin_url( 'admin.php?page=wc-admin&path=/payments/additional-payment-methods' );
diff --git a/tests/unit/migrations/test-class-track-upe-status.php b/tests/unit/migrations/test-class-track-upe-status.php
index 4c59006f3af..85ed544354d 100644
--- a/tests/unit/migrations/test-class-track-upe-status.php
+++ b/tests/unit/migrations/test-class-track-upe-status.php
@@ -23,6 +23,8 @@ public function set_up() {
 		parent::set_up();
 
 		delete_option( Track_Upe_Status::IS_TRACKED_OPTION );
+		delete_option( WC_Payments_Features::UPE_FLAG_NAME );
+		delete_option( WC_Payments_Features::UPE_SPLIT_FLAG_NAME );
 	}
 
 	/**
@@ -39,7 +41,7 @@ public function tear_down() {
 	 * Make sure the 'wcpay_upe_enabled' event is registered when upe is enabled.
 	 */
 	public function test_track_enabled_on_upgrade() {
-		update_option( WC_Payments_Features::UPE_FLAG_NAME, '1' );
+		update_option( WC_Payments_Features::UPE_SPLIT_FLAG_NAME, '1' );
 
 		Track_Upe_Status::maybe_track();
 
@@ -54,7 +56,7 @@ public function test_track_enabled_on_upgrade() {
 	}
 
 	public function test_track_disabled_on_upgrade() {
-		update_option( WC_Payments_Features::UPE_FLAG_NAME, 'disabled' );
+		update_option( WC_Payments_Features::UPE_SPLIT_FLAG_NAME, 'disabled' );
 
 		Track_Upe_Status::maybe_track();