PhonePe brings offline UPI payments to feature phones through UPI 123Pay
PhonePe has launched SMS-based UPI payments for feature phones without internet access, pre-bundled with Nokia, HMD, Lava and Itel devices. The move targets more than 200 million feature-phone users and could widen digital payment acceptance in low-connectivity Indian markets.
What happened
PhonePe launched UPI 123Pay, enabling offline SMS-based UPI payments on feature phones. Pre-bundled with Nokia, HMD, Lava and Itel devices, it targets over 200
Key facts
- More than 200 million feature phone users targeted
- Next 300 million users targeted for digital onboarding
- Over 71.5 crore registered users as of July 2026
- Over 5 crore merchant partners
- 12 Indian languages supported
- 2G connectivity support
Why this matters
Pre-bundling with Nokia, HMD, Lava and Itel positions PhonePe to deepen OEM and merchant-distribution partnerships, creating opportunities to secure exclusive channels across underserved Indian markets.
What to watch
- Number of supported handset models, active feature-phone UPI users and repeat transaction frequency after launch.
- Transaction success rates, latency and dispute rates in low-connectivity geographies.
- Whether the service supports only person-to-person transfers or scales efficiently to merchant QR and bill-payment use cases.
- Telecom operator integrations, SIM/network compatibility and any pricing for SMS or assisted-payment flows.
- RBI, NPCI or government incentives for offline payments, rural digital adoption and feature-phone financial inclusion.
- Competitive launches from Google Pay, Paytm, major banks, telecoms or other UPI third-party apps.
- Evidence that merchants receive settlement and confirmation reliably enough to accept feature-phone-originated payments.
- PhonePe will likely add regional-language prompts, assisted onboarding and agent-led activation to reduce first-use friction.
- Handset partners may market UPI capability as a default feature, pairing it with low-cost devices targeted at rural upgrades and secondary-phone users.
- PhonePe may pursue telecom partnerships for more reliable SMS/USSD delivery, zero-rated service flows and identity verification support.
- Merchant acquisition teams may target cash-heavy categories such as local transport, mandis, small kiranas and rural service providers.
- Rivals and banks are likely to accelerate 123Pay-compatible offerings, increasing promotional incentives for feature-phone payment activation.