Daijiworld Media Network - New Delhi
New Delhi, Jun 21: PhonePe has clarified that inactivity charges on dormant PhonePe Wallets will not affect users’ linked bank accounts or UPI transactions, following confusion among customers after receiving wallet inactivity notifications.
The company said the charges apply only to the PhonePe Wallet, a prepaid payment instrument (PPI), and not to payments made through the Unified Payments Interface (UPI), where funds are directly deducted from a user’s bank account.
The clarification comes amid a common misunderstanding among users who consider their PhonePe account, UPI services and PhonePe Wallet as the same product. However, all three operate separately and follow different rules.
PhonePe confirmed that if a wallet has insufficient balance, the inactivity fee will not be recovered from the user’s linked bank account or through UPI. The wallet balance will also not become negative.
The company explained that wallet activity and UPI activity are monitored separately. Therefore, users who regularly make QR code payments, transfer money or pay bills through UPI may still receive inactivity alerts if their PhonePe Wallet has not been used for a long period.
Users are informed 15 days in advance before any inactivity fee is deducted from the wallet balance. During this period, they can reactivate the wallet, add funds, withdraw eligible balances or close the wallet.
PhonePe also clarified that users do not necessarily need to upgrade to Full KYC status to reactivate their wallets. Reactivation can generally be completed through OTP verification and a wallet transaction.
Another confusion among customers relates to cashback rewards. PhonePe said cashback amounts are usually stored separately under Gift Card Balance and are not part of the PhonePe Wallet. Receiving cashback does not mean the wallet is active or that cashback balances are subject to inactivity deductions.
The company also addressed concerns from users facing difficulties while closing their wallets, advising them to contact customer support for assistance with closure or wallet-related issues.
Wallet inactivity charges are not exclusive to PhonePe and are levied by some prepaid payment instrument providers to cover maintenance, compliance and operational costs linked to dormant accounts.
The key difference between UPI and a wallet is that UPI transactions directly use funds from a linked bank account, while a wallet stores prepaid money separately. Hence, the inactivity charge applies only to the PhonePe Wallet and does not impact UPI payments or bank accounts.