PhonePe Launches UPI 123Pay for Feature Phones Without Internet Access

Fintech major PhonePe on Monday announced the launch of 'PhonePe UPI 123Pay', a service that enables Unified Payments Interface (UPI) transactions for feature phone users without requiring an internet connection.

With this rollout, PhonePe states it has become the first major third-party application provider (TPAP) to extend UPI payment capabilities to an estimated pool of more than 200 million feature phone users across India.

The service is built on a proprietary technology stack and utilizes an SMS-based architecture to maintain transaction reliability, particularly in regions with limited 2G connectivity. To facilitate distribution, the company has partnered with handset manufacturers including Nokia, HMD, Lava International, and Itel Mobile (Transsion Holdings) to have the service pre-bundled on their devices.

Sameer Nigam, Founder and CEO of PhonePe, stated that bringing UPI to feature phones extends the benefits of digital payments beyond smartphones to every corner of the country. He added that the initiative is designed to drive financial inclusion by onboarding the next 300 million users into the digital fold.

The platform supports peer-to-peer (P2P) transfers and peer-to-merchant (P2M) payments. For feature phones equipped with cameras, the service also accommodates QR code scanning. Users can additionally manage accounts, check balances, and view transaction histories through the interface.

To assist first-time users, PhonePe has introduced a voice-first helpline. The assistant provides step-by-step activation guidance in English and 12 Indian languages.

According to the company, future updates will introduce additional capabilities such as utility bill payments, recharges, and Aadhaar-based onboarding.

As of July 2026, PhonePe reported a registered user base of over 71.5 crore users alongside a merchant network exceeding five crore partners.

"PhonePe's integration of UPI for feature phones through an SMS-based architecture marks a practical step toward deepening digital financial inclusion in India. By targeting the vast demographic still reliant on feature phones and partnering directly with handset manufacturers, the company is addressing connectivity gaps in semi-urban and rural markets. This move not only expands their addressable user base beyond smartphones but also establishes a scalable framework for reaching the next wave of digital consumers." — Dr. Shishir Gupta, Founder & CEO, StartupLanes