Fintech major PhonePe announced the launch of PhonePe UPI 123Pay, a service that allows feature phone users to make UPI transactions without requiring an internet connection. According to The Economic Times and Mint, the service was officially launched on Monday, making PhonePe the first major third-party application provider (TPAP) to extend UPI payment capabilities to an estimated more than 200 million feature phone users across India. The initiative specifically targets users in rural and semi-urban areas where smartphone access and reliable internet connectivity can still be limited, significantly expanding digital payment accessibility beyond smartphones. As reported by Mint, the service uses the company's proprietary technology and an SMS-based system to facilitate payments, including in areas where 2G connectivity is limited. CEO Sameer Nigam emphasized that bringing UPI to feature phones extends digital payment benefits to every corner of the country, supporting the company's mission to drive financial inclusion across India.
The service utilizes a proprietary technology stack and SMS-based architecture, designed to ensure transaction reliability even in areas with limited 2G connectivity. As reported by The Economic Times and Mint, the service is built on a technology stack developed specifically to enable UPI payments on feature phones. Users can register through a conversational voice assistant that provides step-by-step guidance in English and 12 Indian languages, unlike traditional IVR systems that rely on fixed menu options. The registration process involves opening the pre-installed PhonePe app, selecting a bank, entering debit card details, setting a UPI PIN, and completing device registration. To support the deployment, PhonePe has established partnerships with key device manufacturers including Nokia, HMD, Lava International, and Itel Mobile (Transsion Holdings) to have the service pre-bundled directly onto new feature phones. Users can begin by opening the PhonePe app that comes pre-installed on their feature phone, agreeing to the terms and conditions, and choosing their bank from the available options.
According to The Economic Times and Mint, PhonePe UPI 123Pay currently enables several key financial transactions including peer-to-peer (P2P) transfers through mobile numbers or UPI IDs, peer-to-merchant (P2M) payments using UPI IDs or QR code scanning on feature phones equipped with cameras, account management, balance checks, and transaction history verification. Users can also check their bank account balance and view transaction history through the service. Feature phones that have cameras will also support PhonePe's Scan and Pay facility, where users can scan a merchant's QR code, enter the payment amount and complete the transaction by entering their UPI PIN. However, as reported by The Economic Times, around 40% of feature phones have cameras, meaning QR-based payments will not be available on every handset. The service is designed to make UPI more accessible to people who do not own smartphones or have reliable internet connectivity. To onboard first-time users, the company has launched a voice-first, AI-powered helpline that guides users through activation in English and 12 Indian regional languages.
As reported by The Economic Times and Mint, future updates will introduce additional capabilities such as utility bill payments, mobile recharges, and Aadhaar-based onboarding onto UPI. The company plans to add partnerships with more handset manufacturers in the coming months to expand the service's reach. CEO Sameer Nigam emphasized that the initiative aims to take digital payments to a wider section of the population and bring more users into India's digital financial ecosystem. The service is intended to bring the 'next 300 million users' into the digital payments ecosystem, positioning PhonePe to significantly expand its user base beyond its current over 71.5 crore registered users and over five crore partners as of July 2026.
As of July 2026, PhonePe reported a user base of over 71.5 crore registered users and a merchant network of over five crore partners. According to The Economic Times and Mint, this substantial user base positions the company well to expand into the feature phone market segment. The platform allows users to perform peer-to-peer (P2P) transfers and peer-to-merchant (P2M) payments, with additional capabilities planned for future updates. With UPI 123Pay, PhonePe aims to extend digital payment access to a wider group of Indians who continue to use feature phones instead of smartphones. This substantial user base and merchant network provides PhonePe with the foundation to successfully launch and scale the feature phone service across India's diverse market segments. The feature-phone push comes as UPI continues to see rapid growth, with UPI transactions reaching a record 24.51 billion in August 2026, up from 23.66 billion in July, and transaction value standing at ₹29.82 lakh crore in August compared with ₹24.85 lakh crore a year earlier, representing a 20% increase.
