Winning Bizness Desk

Mumbai.Digital payments platform PhonePe is preparing to levy a maintenance charge on inactive wallet accounts, a move that has triggered widespread criticism from users across social media platforms. Under the company's revised policy, a PhonePe wallet that remains unused for 365 consecutive days will be classified as dormant or inactive. Once marked inactive, the wallet will attract a maintenance fee of Rs 100 every quarter, which will be deducted from the available balance.

The development has sparked a strong reaction on social media, particularly on X and Reddit, where users have shared screenshots of messages received from the company. Many users claim they have started receiving SMS alerts urging them to either recharge their wallets or carry out transactions to avoid the proposed maintenance fee. The quarterly nature of the charge has become a major point of contention, with several users describing it as a penalty rather than a routine service fee.

Users object to quarterly deduction model

According to PhonePe's updated terms and conditions, customers whose wallets are approaching dormant status will receive advance notifications before any fee is imposed. The company has said it will provide a 15-day notice period and send multiple reminders during this window. If the wallet remains inactive despite these alerts, the maintenance charge will be deducted directly from the wallet balance.

Key points of the new policy include:

• Wallets unused for 365 consecutive days will be classified as inactive.
• A maintenance charge of Rs 100 will be deducted every three months.
• Users will receive a 15-day advance notice before deductions begin.
• Multiple alerts and reminders will be sent during the notice period.

Low-balance wallets may be fully exhausted

The company's policy also specifies how low-balance wallets will be treated. If a dormant wallet contains less than Rs 100, PhonePe will deduct the entire available amount instead of creating a negative balance. In such cases, the wallet balance will simply be reduced to zero. The company has further reserved the right to revise its fee structure in the future and introduce additional charges on existing services if required.

This aspect of the policy has added to user concerns, especially among customers who maintain small balances in wallets that are rarely used. Critics argue that many consumers are unaware that even a small amount left idle in a digital wallet could gradually disappear through maintenance deductions.

Similar charges already exist in industry

PhonePe is not the first player in the digital wallet ecosystem to impose inactivity-related charges. In 2021, MobiKwik announced an annual wallet maintenance fee ranging between Rs 100 and Rs 140 for inactive users. Airtel Payments Bank also includes maintenance-related provisions for inactive wallets in its schedule of charges.

Industry examples include:

• MobiKwik introduced inactivity-related wallet charges in 2021.
• Airtel Payments Bank maintains fee provisions for inactive wallets.
• Dormancy charges are increasingly becoming part of digital wallet business models.

UPI reduces dependence on digital wallets

The backdrop to the move is the rapid rise of UPI-based payments, which have significantly reduced the role of prepaid wallets in everyday transactions. Most users now prefer direct bank-to-bank transfers through UPI, leaving small amounts parked in wallet accounts for long periods without any activity.

Technology companies argue that maintaining inactive wallets involves ongoing expenditure on infrastructure, regulatory compliance and security systems. They contend that dormancy fees help recover a portion of these operational costs. However, PhonePe has a massive user base and the decision to charge Rs 100 every quarter have led many users to view the policy as unusually aggressive.

Key takeaways:

• Inactive PhonePe wallets will attract Rs 100 quarterly maintenance charges.
• Wallets become dormant after 365 days of non-usage.
• Users will receive a 15-day advance notice and alerts.
• Wallets with less than Rs 100 balance may be reduced to zero.
• Similar inactivity charges already exist in parts of the industry.
• UPI adoption has sharply reduced wallet usage.
• The decision has triggered widespread criticism on social media.

Growing debate over digital payment costs

The controversy highlights a broader debate over the evolving economics of India's digital payments sector. While companies seek sustainable revenue streams amid rising compliance and technology expenses, consumers increasingly expect low-cost or free digital payment services. As discussions continue online, many users are likely to closely monitor their wallet balances and activity levels to avoid falling into the dormant category and incurring recurring charges.