PhonePe has clarified its new wallet inactivity fee after many users raised concerns on social media. The digital payments company said that the charge will apply only to inactive PhonePe Wallet balances and will not affect linked bank accounts or regular UPI payments.
The clarification comes after reports about a new maintenance fee created confusion among users. Many people believed they could be charged even if they regularly used PhonePe for UPI payments. However, the company has explained that the fee is only for dormant wallet accounts and is meant to cover the cost of maintaining inactive prepaid payment accounts as required by regulations.
What Is PhonePe’s New Inactive Wallet Fee?
According to PhonePe, a wallet will be considered inactive if there are no financial transactions made through the wallet for 365 consecutive days.
If a wallet remains inactive for one year, PhonePe may charge a maintenance fee of ₹100 per quarter, including GST. This means users could pay up to ₹400 in a year if their wallet continues to remain inactive and has enough balance available.
The company has also explained that not all activity on the app counts as wallet usage. Logging into the app, completing KYC, checking account details, or making normal UPI payments through a linked bank account will not reset the inactivity period.
To keep the wallet active, users must make at least one transaction using the PhonePe Wallet balance. Even a small transaction made through the wallet can restart the one-year activity period.
PhonePe stressed that the fee will be deducted only from the available wallet balance. No money will be taken from a user’s linked bank account or through UPI.
If the wallet balance is zero, no fee will be charged. If the balance is less than ₹100, PhonePe will deduct only the available amount and reduce the balance to zero. The wallet will never go into a negative balance.
How Users Can Avoid the Charges
Before charging the fee, PhonePe will send multiple alerts to affected users. The company said users will receive SMS messages and app notifications during a 15-day advance notice period.
Users can avoid the charge by making any transaction using their wallet balance during this period. Once a transaction is completed, the wallet becomes active again and no fee is deducted.
There are also other ways to avoid the charges. Users can spend or withdraw the remaining balance from their wallet and bring it down to zero. Since the fee is charged only on available wallet funds, an empty wallet will not attract any maintenance fee.
Another option is to permanently close the PhonePe Wallet. Users can do this through the app by going to the Help section and following the wallet closure process.
PhonePe said that closing the wallet officially is important because simply uninstalling the app does not deactivate the wallet. The wallet continues to exist in the company’s system unless users complete the closure process.
Any remaining balance in the wallet will be returned to the original source or a registered bank account after the wallet is closed.
Why PhonePe Introduced This Policy
The announcement led to mixed reactions online. Many users said they use PhonePe regularly for UPI payments and felt confused about why their wallets could still be considered inactive.
The main reason for this confusion is the difference between UPI transactions and wallet transactions. A person may use PhonePe every day through a linked bank account, but if they do not use their wallet balance, the wallet can still become inactive after one year.
PhonePe also clarified another common misunderstanding related to cashback rewards. The company said cashback is usually credited to a separate Gift Card Balance and not to the PhonePe Wallet. Because of this, receiving cashback does not make a wallet active. The inactivity fee also does not apply to gift card balances, although gift cards have their own expiry period.
According to PhonePe, the maintenance fee helps cover the cost of managing dormant accounts, including system maintenance, compliance requirements, software updates, and account management.
The company also said the policy follows Reserve Bank of India (RBI) guidelines for Prepaid Payment Instruments (PPIs), which require wallets with no financial transactions for one year to be treated as inactive.
PhonePe noted that similar inactivity charges have been introduced by other digital payment companies in the past. While the policy has sparked debate among users, the company maintains that it only affects inactive wallet balances and does not impact regular UPI payments made through linked bank accounts.
For users who have money stored in their PhonePe Wallet, making a small transaction once a year or keeping the balance at zero can help avoid any future inactivity charges.