PhonePe Charging ₹100 Fee From Users In India If Wallet Not Used For 365 Days, Sparks User Backlash

PhonePe, one of India's most widely used UPI apps, has set off a wave of online frustration after rolling out an inactivity fee for its in-app wallet feature, a charge many users say they didn't even know they could be subject to.vAccording to the updated terms, PhonePe will levy a Rs. 100 fee, plus GST, every quarter on wallets that have seen no activity for 365 consecutive days.

Crucially, the inactivity clock isn't reset by regular UPI payments or simply logging into the app, only actual wallet transactions, like loading money into the wallet or spending from it, count as activity. The fee will be deducted directly from the wallet balance. If the balance is less than Rs. 100, PhonePe will deduct whatever is available, leaving the wallet at zero rather than pushing it into negative territory.

The company says it will give users a heads-up before the deduction kicks in. A 15-day advance notice will be sent via an SMS before the fee is applied. PhonePe has framed the move as compliance with RBI guidelines meant to cover the cost of maintaining inactive wallet accounts.

PhonePe change in policy sparks user backlash

The backlash stems less from the amount itself and more from how blindsided users felt. Many discovered the policy only after receiving SMS alerts urging them to 'start using' their wallet to dodge the charge. These alerts were the first sign, for a lot of recipients, that they even had an active PhonePe wallet to begin with.

Tipster Abhishek Yadav, who shared one such alert on X, pointed out that most people don't use the PhonePe wallet at all since they pay directly via UPI from their bank account, and may not even realize they have a wallet tied to it. He added that being charged for a feature people never use, while also making it harder to opt out. He called this new change as a terrible look for the company.

Adding to the frustration is the process for closing the wallet entirely. Several users have noted that shutting down or withdrawing small leftover balances requires going through full KYC verification, meaning users have to submit PAN and Aadhaar details just to exit a feature they may have forgotten they had.

How to avoid the fee from PhonePe?

For users keen to dodge the charge, the workaround is straightforward, if a little inconvenient:

- Make at least one wallet transaction (loading or spending funds) before the 365-day window closes

- Drain the existing wallet balance to zero

- Deactivate the wallet entirely via the app's settings

Any of these resets the inactivity clock. Notably, none of this affects regular UPI transactions, which continue to function as usual. The fee applies strictly to the dormant wallet feature, not to PhonePe as a payments app overall.

Furthermore, online chatter suggests that this charge applies only to inactive PhonePe Wallets that still have a positive wallet balance. It does not affect users' linked bank accounts, UPI balances, or wallets with zero balance. This hasn't been confirmed or denied by PhonePe.

PhonePe isn't breaking new ground with this move. Other fintech platforms have charged similar fees in the past. MobiKwik introduced an inactivity charge in 2021, while Airtel Payments Bank previously levied a Rs. 20 maintenance fee on wallets left unused for three months, before eventually shifting to an annual maintenance charge model.

Even so, the rollout has triggered a fresh round of angry sentiment online, with users venting about being charged for inactivity on a service many never actively chose to use, and about the friction involved in fully exiting it.