New Delhi, June 20: Recently, PhonePe sent out notifications regarding wallet inactivity, sparking increased interest among consumers about digital wallets and their functionalities. A key point that emerged from these discussions is that many users still believe that their PhonePe account, UPI account, and PhonePe wallet are the same. In reality, these are distinct payment methods that operate independently and serve different purposes.
As digital payments become an integral part of daily life, understanding how wallets function and how they differ from UPI is crucial. This knowledge helps consumers make informed decisions and accurately comprehend the products they are using.
What is the Difference Between UPI and Wallet?
When you make a payment via UPI on PhonePe, the money is directly deducted from your linked bank account. In contrast, the PhonePe wallet is a prepaid payment instrument (PPI) where funds are kept separate from your bank account.
This distinction is important because inactivity fees apply only to the PhonePe wallet, not to bank accounts linked with UPI.
How Does Wallet Inactivity Fee Work?
Many users wonder if PhonePe can deduct inactivity fees from their bank accounts if their wallet balance is zero. The answer is no. If a user’s PhonePe wallet has been inactive for a long time and has a zero balance, the inactivity fee will not be charged to their bank account or via UPI. Similarly, the wallet balance will not go negative.
In other words:
– No deductions will be made from the linked bank account.
– No amount will be deducted via UPI.
– A wallet with insufficient balance will not show a negative balance.
Why Might You Receive Notifications Despite Regular Use?
Some users have reported receiving inactivity notifications even though they use PhonePe regularly. This happens because wallet activity and UPI activity are tracked separately. A user may frequently make payments via UPI but may not have used their PhonePe wallet for months or even years. In such cases, the wallet can be considered inactive, even if the user regularly engages with the PhonePe app.
Advance Notifications and User Options
According to PhonePe, users affected by inactivity fees will be notified 15 days in advance of any deductions. During this period, users have several options:
– Reactivate their wallet.
– Add funds to the wallet if they wish to continue using it.
– Withdraw any eligible balance.
– Decide whether to keep or close the wallet.
Common Questions About KYC
Some users believe they need to complete full KYC to reactivate their wallet. However, it is not necessary to convert a minimum KYC wallet to full KYC for reactivation. Users can activate their wallet by completing OTP verification and making a transaction through the wallet. Full KYC is not a mandatory requirement for activation.
Confusion Regarding Wallet Balance and Cashback
Another confusion relates to cashback. Many users think that cashback amounts are credited to their PhonePe wallet. In reality, cashback is typically credited to a separate gift card balance, which is distinct from the PhonePe wallet. Therefore, receiving cashback does not imply that your wallet is active, nor does it mean that inactivity fees will apply to that cashback amount.
Closing the Wallet and Customer Support
Some users have encountered error messages or additional verification issues while trying to close their wallet through the app. In such cases, users are advised to contact PhonePe customer support for assistance with account closure or wallet-related issues.
Why Are Inactivity Fees Charged?
Wallets are regulated as prepaid payment instruments and require maintenance, compliance, and operational support, even if they are not actively used. This is why some wallet providers impose inactivity or maintenance fees on wallets that have been dormant for an extended period. This practice is not unique to one company but is common among several wallet providers in the prepaid payment sector.
The most important takeaway is that inactivity fees apply only to the PhonePe wallet, a separate prepaid payment instrument. These fees do not affect UPI transactions, do not impact bank accounts, and do not lead to negative wallet balances.
For users who have received such notifications, the crucial step is to check whether they have an active PhonePe wallet and then decide whether to continue using it, reactivate it, or close it.
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