PhonePe has rolled out UPI 123Pay, a service enabling India's 200 million-plus feature phone users to make digital payments without needing an internet connection. The company becomes the first major third-party application provider to extend UPI payments to feature phone users across the country.
The service targets last-mile access gaps in rural and semi-urban India, where smartphone penetration and reliable internet remain inconsistent. Founder and CEO Sameer Nigam said the launch reflects what building for India actually means, meeting people where they are, adding that the goal is to onboard the next 300 million users into the digital financial fold.
How does PhonePe UPI payments work on feature phones?
The app runs on the UPI 123 protocol, developed by NPCI specifically for feature phones that lack internet or data capability but support SMS. The system relies on an SMS-based architecture designed to function even in areas with limited 2G connectivity. Nigam noted that while the experience differs slightly from smartphone payments since not all feature phones have cameras, security levels remain the same.
Steps to use PhonePe UPI 123Pay
1. Activate the service: Available directly on select feature phone models, with more devices to follow.
2. Send money via mobile number or VPA: Users can transfer funds using a mobile number or UPI ID.
3. Scan and pay (camera-enabled phones only): Feature phones with cameras allow QR code scanning to complete payments; roughly 40% of feature phones have this capability.
4. Pay merchants directly: Peer-to-merchant payments can be made through UPI IDs.
5. Check balance and history: Users can view their bank balance and transaction history through the service.
The service comes pre-bundled on Nokia, HMD, Lava International and Itel Mobile-Transsion Holdings devices, with more manufacturer tie-ups expected in the coming months. To help first-time users, PhonePe has introduced a voice-first, AI-powered helpline offering step-by-step activation guidance in English and 12 Indian languages.
PhonePe said future updates will add utility bill payments, recharges and Aadhaar-based onboarding to the platform.
