PhonePe Brings UPI Payments to 200 Mn+ Feature Phone Users Without Internet

Digital payments company PhonePe has launched UPI 123Pay for feature phones, allowing users to make UPI payments without requiring a smartphone or an internet connection.

The service is aimed at India’s 200 million-plus feature phone users, particularly consumers who do not own smartphones or live in areas where reliable mobile internet access remains limited. PhonePe said it is the first major third-party application provider (TPAP) to extend UPI payments to feature phone users at this scale.

PhonePe UPI 123Pay uses an SMS-based architecture designed to support transactions even in areas with limited 2G connectivity. Users can make peer-to-peer payments using mobile numbers or UPI IDs, while feature phones with cameras can also support merchant payments through QR-code scanning.

The service also allows users to check their bank account balance and view transaction history. PhonePe said upcoming updates will add services including bill payments, mobile recharges and Aadhaar-based onboarding to the feature-phone experience.

The service will initially come pre-installed on selected feature phones from Nokia, HMD, Lava International and Itel Mobile, with PhonePe planning to add more handset manufacturers in the coming months. Supported devices include models such as the HMD 105 2G, HMD 110 2G, Nokia 105 Classic, Nokia 105, Nokia 106 and Nokia 123 Shield.

To help users activate and operate the service, PhonePe has also introduced a voice-first, AI-powered helpline. The conversational assistant provides step-by-step guidance in English and 12 Indian languages, including support for device activation and basic UPI-related queries.

Users can register directly on a supported feature phone without using a smartphone or internet connection. The activation process involves selecting a bank, entering the last six digits of the debit card and its expiry date, and setting a UPI PIN. Once activated, users can make payments through mobile numbers, UPI IDs or, on compatible devices, by scanning QR codes.

PhonePe’s service is built on the NPCI’s UPI 123Pay framework, which was introduced to enable UPI transactions on feature phones without conventional internet access. PhonePe had announced in June 2025 that it had acquired the intellectual property of Gupshup’s GSPay technology, which was developed for feature-phone UPI payments, and planned to build its own feature-phone payment experience on that technology.

The feature-phone launch gives PhonePe access to a segment of consumers that has remained relatively underserved by smartphone-based payment applications because of device and connectivity limitations. The company is particularly targeting rural and semi-urban markets, where smartphone penetration and reliable mobile data connectivity can vary significantly.

The move also extends PhonePe’s existing payment network beyond smartphones. According to the company’s latest figures, PhonePe had more than 718 million registered users and over 50 million merchants as of July 2026.

PhonePe continues to hold the largest share of India’s UPI transaction market. In July 2026, it processed 10.86 billion UPI transactions, accounting for 45.89% of total UPI transaction volume. Its transactions were worth around ₹14.44 lakh crore, giving it a 48.33% share of total UPI transaction value. India’s UPI network processed 23.66 billion transactions worth ₹29.88 lakh crore during the month.

The feature-phone push comes nearly a decade after UPI’s launch and reflects the industry’s effort to extend digital payments beyond smartphone users. For PhonePe, the challenge now will be to drive adoption among feature-phone users while maintaining a simple and secure payment experience across devices with limited hardware and connectivity.

With UPI 123Pay, PhonePe is not introducing feature-phone UPI itself; rather, it is bringing its own large-scale third-party payment platform to a segment that has historically relied on NPCI-led feature-phone solutions, potentially widening access to UPI across India’s next set of digital payment users.