PhonePe launches UPI 123Pay for feature-phone users without internet

PhonePe’s SMS-based UPI 123Pay is being pre-installed on select Nokia, HMD, Lava and Itel feature phones, enabling transfers and merchant payments without mobile internet. Bill payments, recharges and Aadhaar-based onboarding are planned next.

— Source publishedMon, 31 Aug, 2026, 12:59 IST·First seen Mon, 31 Aug, 2026, 13:00 IST·Source Entrackr · Newsletter

What happened

PhonePe launched SMS-based UPI 123Pay for feature-phone users in India without internet access, pre-installed on select Nokia, HMD, Lava and Itel devices. The

Key facts

  • 200 million feature phone users
  • nearly 11 billion UPI transactions in July
  • 45.89% UPI transaction-volume share in July
  • Rs 14.44 lakh crore transaction value in July
  • 48.33% UPI transaction-value share
  • 12 Indian languages
  • 2G connectivity

Why this matters

The handset pre-install partnerships with Nokia, HMD, Lava and Itel create a distribution-led route into underserved users, making device OEMs, telecoms and offline-payment infrastructure partners strategic targets.

What to watch

  • Number of compatible handsets shipped with UPI 123Pay pre-installed and active-user conversion rates.
  • Transaction volume, repeat-payment frequency and average ticket size relative to smartphone UPI users.
  • Geographic concentration of adoption in rural, low-connectivity and lower-income districts.
  • Completion rates for Aadhaar onboarding, recharges and bill payments once launched.
  • Fraud, failed-transaction and customer-support rates for SMS-based flows.
  • Announcements of comparable offline UPI products from Google Pay, Paytm, banks, telecom operators or NPCI.
  • Merchant QR acceptance growth and changes in cash-to-digital mix among small retailers.
  • Expand OEM partnerships beyond the initial Nokia, HMD, Lava and Itel handset base, with prominence in low-cost device distribution channels.
  • Add planned bill pay, mobile recharge and Aadhaar-enabled onboarding to increase repeat usage beyond person-to-person transfers.
  • Build assisted onboarding through merchants, retail agents and telecom distribution points in rural and semi-urban markets.
  • Incentivize merchant acceptance and educate users on SMS payment confirmation, PIN security and dispute resolution.
  • Use feature-phone transaction data to cross-sell insurance, credit, savings and merchant financial services where regulation permits.

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