PhonePe Users Beware: New Charges Introduced, Here’s How To Avoid Wallet's Inactivity Fee

Digital payments major PhonePe has announced a significant update that will have a direct impact on existing users. The platform revised its terms of service, introducing an "inactivity charge" for users with dormant wallets. The new measure is designed to encourage regular usage of the wallet feature within the app. 

What Users Need to Know

Under the new guidelines, any user who has a PhonePe wallet and has not done a transaction using it for a continuous period of 12 months will have to pay an inactivity fee. Such wallets will be classified as inactive, and these users will be subject to a quarterly inactivity fee of Rs 100.

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According to the guideline, to maintain an active status and avoid these charges, users simply need to make at least one wallet transaction every three months. Merchant payments, mobile recharges, or utility bill payments made directly from the wallet balance are considered valid transactions.

No Impact On UPI 

PhonePe has emphasised that the new rule is applicable to the existing wallet users only; this will not affect UPI (Unified Payments Interface) transactions.  PhonePe Wallet is a digital account that requires a pre-payment, and it does not require a PIN for every transaction. Meaning users have to first add money to the wallet to be able to do transactions.  PhonePe introduced an inactivity fee for this service only. 

Whereas, UPIFacility is a direct bank-to-bank transfer service, requiring a secure PIN. This service does not incur inactivity charges.

Zero Balance Protection

However, the digital payment platform clarified that the fee will only be deducted from the available wallet balance, meaning if a PhonePe wallet has a zero balance, the account will not see any deduction or go into a negative balance. Additionally, no funds will be pulled from a user's linked bank account to cover the fee.

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As per the information, PhonePe has already begun notifying all customers whose wallets have been deactivated for a long time. Meanwhile, if a user wants to avoid the penalty, they need to make a small transaction (such as a mobile recharge or merchant payment) from using the PhonePe wallet in time. This will reactivate your wallet and save you from the penalty.