How to resolve Apple Pay showing 'account restricted'?

“Inherited”? Was it thoroughly and completely cleansed before your grandson took it over? It should have been. (In other words, there should be no trace of the iPhone’s previous owner left on your grandson’s iPhone.)

How to request access to a deceased family member’s Apple Account - Apple Support

What to do before you sell, give away, or trade in your iPhone or iPad - Apple Support

Account restricted is permanent and is associated with the Apple ID/Apple Account of your father. The iPhone will need to be erased before, including your father’s Apple Account before any financial services should be used.

Using financial services of a deceased person is fraud and banks take it very seriously. It’s definitely not something your son should have access to.