PhonePe targets feature-phone users with offline UPI service

Bengaluru: PhonePe on Monday rolled out an SMS-based UPI payments service for feature-phone users, seeking to extend digital transactions beyond smartphones and mobile internet coverage.The service, branded PhonePe UPI 123Pay, will be bundled on select handsets sold by Nokia, HMD, Lava International and itel. It enables customers to create and use a UPI account directly on a compatible feature phone without relying on a data connection, the Walmart-backed payments company said.Users will be able to transfer money using a mobile number or UPI ID, pay merchants and view bank balances and previous transactions. On feature phones equipped with cameras, the application will also support QR-code payments. PhonePe said its platform operates through SMS-based technology, potentially allowing transactions even where internet connectivity is patchy or unavailable.The launch is aimed at a still-large base of users who have not moved to smartphones. PhonePe has also introduced a voice helpline in English and 12 Indian languages to help customers register and address basic UPI-related queries. The company plans to add services such as bill payments, mobile recharges and Aadhaar-based UPI onboarding in subsequent phases.Customers can activate the service by opening the pre-installed app, choosing their bank, entering the last six digits and expiry date of their debit card, and setting a UPI PIN. Once registered, they can choose payment options including scan-and-pay, payments to contacts, mobile-number transfers and payments to UPI IDs.The product uses UPI 123Pay, the Reserve Bank of India’s feature-phone payments framework introduced in March 2022. The system was created to offer UPI access through options such as an application on the handset, interactive voice response, missed calls and proximity sound-based payments. It was meant to improve on the earlier *99# service, whose use remained limited because of a less convenient customer experience.The RBI increased the transaction ceiling for UPI 123Pay to Rs 10,000 from Rs 5,000 in 2024, widening the scope for feature-phone users to make larger-value payments. PhonePe’s move follows its acquisition of the GSPay technology stack from conversational messaging firm Gupshup in June 2025. Gupshup had introduced an SMS-based UPI 123Pay offering on selected Nokia and itel devices in 2023; PhonePe had said it would adapt the underlying technology for its own feature-phone product.Get the latest Business News and Live updates. Download the TOI app.