PhonePe Wallet Inactivity Fees: Clarity and Understanding

PhonePe, a prominent digital payments platform, has provided clarification regarding inactivity fees for dormant wallets, ensuring users that their linked bank accounts and UPI transactions will remain unaffected by these charges. This clarification follows notifications sent to customers that caused confusion concerning the wallet inactivity policy.

Understanding Inactivity Fees on PhonePe Wallets

Customers had received alerts about inactivity fees of up to Rs 100 per quarter for PhonePe wallets that have not been used for over 12 months. This raised concerns about potential deductions from users’ linked bank accounts or UPI due to insufficient wallet balances.

What the Company Says

According to PhonePe, the inactivity fee specifically applies to the PhonePe Wallet, which is a prepaid payment instrument (PPI) and operates independently from the user’s linked bank account. If a wallet holds a zero balance and stays inactive for an extended duration, no charges will be deducted from the user’s bank account or UPI.

Wallet Balances and Negative Amounts

Furthermore, PhonePe assured users that inactivity charges will not lead to negative balances in their wallets. The confusion mainly arose from the difference between UPI usage and wallet activity. UPI transactions are processed directly via linked bank accounts, while wallet balances are managed separately. Therefore, it is possible for a customer to use PhonePe consistently for QR code payments, bill payments, and money transfers through UPI, yet have their wallet remain inactive for extended periods.

Notification Process

PhonePe also mentioned that users will receive notifications 15 days before any inactivity fee is levied on their wallet balance. This gives users the opportunity to reactivate their wallets, add funds, withdraw eligible balances, or decide whether to keep the wallet active.

Industry Practice Regarding Inactivity Charges

The company highlighted that charging inactivity or maintenance fees on dormant prepaid payment instruments is standard practice to cover compliance and operational costs. This approach is not exclusive to PhonePe, as many wallet providers within the prepaid payments sector adopt similar policies.

Tracking Wallet Inactivity

Additionally, Walmart-backed PhonePe clarified that tracking wallet inactivity is distinct from UPI transaction activity. Hence, users who frequently utilise PhonePe for UPI transactions may still receive inactivity notices if their wallets have gone unused for a considerable time.