If your NGO's donation page offers UPI, the cost of accepting a UPI donation may change for gifts above ₹2,000, and the right response is a technical one: make the checkout record the gross amount, the fee and the net amount separately, decide in advance who bears any fee, and tell donors the truth in plain words. Multiple news reports from September 2026 say NPCI will apply a 0.4% merchant discount rate (MDR) to specified person-to-merchant UPI payments above ₹2,000 from 15 October 2026, capped at ₹300 per transaction, with UPI payments up to ₹2,000 and person-to-person transfers staying free. Reports differ on the exact scope, so treat the figures below as a summary of press coverage and check NPCI's own circular and FAQs, and your payment provider's written terms, before relying on any number. This guide is for NGO teams planning NGO website development in India who want a donation checkout that survives fee changes without confusing donors or breaking accounts.
It covers what the reported rule says, why it matters more for some NGOs than others, how to change the checkout and database so amounts stay correct, the choice between absorbing the fee and inviting donors to cover it, how receipts and reconciliation should treat fees, wording for donors, and a test plan. It does not give tax or legal advice; confirm receipt and accounting treatment with your chartered accountant.
What Has Been Reported
Coverage by Angel One, Moneylife, Inc42 and others describes the following, and it should be verified against NPCI's own documents:
- A 0.4% MDR on specified UPI person-to-merchant payments above ₹2,000, effective 15 October 2026.
- A cap of ₹300 per transaction, reached for payments of ₹75,000 and above.
- No MDR on UPI payments of ₹2,000 or less, and none on person-to-person transfers.
- A flat ₹5 per transaction above ₹2,000 for some sectors such as railways, telecom, insurance, fuel and agricultural inputs.
- An exemption for small merchants receiving up to ₹1 lakh a month through UPI QR codes, with some explainers noting that merchants above that level for several months can move into the regular category.
- Consumers are not charged directly; the fee falls on the merchant side, and how it reaches you depends on your payment provider.
Whether and how charities, donations or your payment aggregator's arrangements are affected is not something we can state from news reports. Ask your provider in writing: does the new MDR apply to our donation payments, from which date, at what rate, and how will it appear in settlement reports?
Why It Matters for Donation Websites
Most NGO donations are small, and many fall under ₹2,000. But the gifts that matter most for a campaign, from larger individual donors and CSR-linked supporters, are often above it. If a fee applies, three things in a donation site can quietly go wrong:
- Net amounts differ from gross amounts. The donor pays ₹10,000; the settlement may arrive as slightly less. If your database stores only one number, either the receipt or the bank reconciliation will be wrong.
- Progress bars and reports overstate. A campaign counter built on gross donations is correct as a measure of donor generosity and incorrect as a measure of funds received. Decide which you show, and label it. See our guide to fundraising progress bars.
- Recurring gifts cross the threshold. A monthly gift of ₹2,000 may be free while one of ₹2,500 is not, which changes the economics of suggested amounts. See UPI AutoPay recurring donations.
Store Three Amounts, Not One
The most durable change is in the data model. For every donation record:
- Gross amount: what the donor paid, and what the receipt is based on.
- Fee amount: what the provider deducted, filled in from the settlement data, not guessed.
- Net amount: what reached your bank account.
Add the payment method, because fees differ between UPI, cards and netbanking, and the provider's payment and settlement reference, so each record can be matched. If your system only has an "amount" field, ask your developer to add the other fields before the date the fee takes effect, and back-fill from provider reports. Our guide to UPI donation reconciliation shows a workflow for matching these records daily.
Absorb the Fee or Invite Donors to Cover It?
There are two honest options, and a hybrid.
Absorb it. The NGO treats fees as a cost of fundraising. The donor sees a clean checkout, and the receipt equals the payment. The cost is real and should appear in your fundraising-cost reporting.
Invite donors to cover it. The checkout shows an optional tick box, unticked by default, such as "Add a small amount so more of my gift reaches the cause." Make it truly optional; pre-ticked boxes are the kind of design that damages trust and is treated as a dark pattern in many jurisdictions. Show the exact extra amount before payment. Decide with your accountant how the extra is recorded and receipted. Testing both versions on your own traffic will tell you whether it affects completion.
Hybrid. Absorb on small gifts, and show the option only above the threshold.
Do not quietly raise the amount the donor pays without clear display, and do not describe a fee as a "tax".
Receipts and Records
The receipt should state what the donor paid. Fees are an NGO-side cost and normally do not change the donor's receipt, but the treatment depends on your registrations and accountant's advice. [TODO for the NGO: confirm with your chartered accountant whether fee-cover amounts are part of the receipted donation.] Make sure the receipt email, the donor account page and the annual statement agree, as described in our guide to donor accounts and giving history.
What to Tell Donors
Keep it short and calm. On the donation page and help page, say whether the NGO absorbs payment costs or invites donors to cover them, and that UPI remains available. Do not tell donors that UPI is "no longer free" unless your own checkout charges them. Update your refund and help pages if the change affects what happens when a payment is corrected.
Pricing and Suggested Amounts
Suggested gift buttons are among the most influential parts of a donation page. If fees matter to you, review the ladder: a button at ₹2,000 and one at ₹2,100 may behave differently for you because of a threshold, not for donors. Do not manipulate the amounts to avoid fees without telling donors anything, and do not discourage UPI, which many donors prefer. Compare the cost of each payment method using your provider's written rates, and decide whether to steer anyone at all. Our article on donation page design covers the amount selector.
Test Plan
- Make test donations just below, at and just above ₹2,000 by UPI, and confirm the gross, fee and net fields fill correctly from settlement data.
- Test a card and a netbanking payment to confirm fees differ by method in the records.
- Test the optional fee-cover tick box, if used: default state, displayed amount, receipt and record.
- Confirm the progress bar uses the figure you decided on and labels it.
- Run the daily reconciliation and explain every mismatch.
- Test a refund of a donation that carried a fee and confirm the records.
- Read the help page and checkout text as a first-time donor.
Frequently Asked Questions
Will donors have to pay a fee to donate by UPI?
Press reports say the MDR falls on the merchant side, not on the payer, and that UPI payments up to ₹2,000 remain free of MDR. Whether your NGO passes any cost to donors is your decision, and it should be shown clearly at checkout.
Does the new MDR apply to NGO donations?
We could not confirm that from the reports we read. Ask your payment provider in writing whether it applies to your donation payments, from what date, at what rate, and how it will appear in settlement reports.
How should a donation database record UPI fees?
Store the gross amount, the fee and the net amount as separate fields, with the payment method and the provider's reference. Fill the fee from settlement reports rather than estimating it, so receipts and bank reconciliation both stay correct.
Should we add an option for donors to cover the fee?
It is an option, not an obligation. If you offer it, keep the box unticked by default, show the exact extra amount before payment, and agree with your accountant how it is recorded and receipted.
Where to Start
Ask your payment provider the three written questions above, then ask your developer to add gross, fee and net fields. Decide the absorb-or-cover policy with your trustees and accountant, and only then change the wording on the page.
Govindani Infotech is a website design and development company in Pune, at Landmark Plaza, Satara Road, Parvati Paytha. We build donation websites for non-profits; see our NGO website page and payment gateway integration. To discuss your checkout, contact us or call 092019 58274.
Sources (press coverage; verify against NPCI's circular and FAQs):