PhonePe launches UPI 123Pay for offline feature-phone payments

PhonePe has introduced UPI 123Pay for feature-phone users, enabling peer-to-peer and merchant payments without an internet connection. The service uses SMS, supports 12 Indian languages and is being pre-bundled on select Nokia, HMD, Lava and Itel devices.

— Source publishedMon, 31 Aug, 2026, 15:32 IST·First seen Mon, 31 Aug, 2026, 15:36 IST·Source The Hindu BusinessLine

What happened

PhonePe launched UPI 123Pay for offline feature-phone transactions via SMS, pre-bundled with Nokia, HMD, Lava and Itel devices. The India service supports P2P

Key facts

  • More than 200 million estimated feature phone users
  • Next 300 million users targeted for digital onboarding
  • 2G connectivity support
  • 12 Indian languages
  • Over 71.5 crore registered users as of July 2026
  • Over five crore merchant partners as of July 2026

Why this matters

The pre-bundling partnerships with Nokia, HMD, Lava and Itel make device OEMs, offline-payment infrastructure and regional merchant networks attractive partnership or acquisition targets.

What to watch

  • Number of supported handset models and active pre-bundled devices.
  • Monthly active UPI 123Pay users, repeat-payment frequency and merchant-payment share versus P2P transfers.
  • Transaction success rates across weak-network areas and carrier/SMS delivery performance.
  • New feature-phone UPI launches from Google Pay, Paytm, banks, telecom operators or NPCI partners.
  • Merchant acquisition in tier-3, rural and cash-dominant districts.
  • Fraud, mistaken-transfer, chargeback and customer-support rates.
  • RBI or NPCI changes to offline UPI limits, authentication requirements or interoperability rules.
  • Expand handset pre-installs beyond the initial Nokia, HMD, Lava and Itel partners, especially through regional-device and telecom distribution channels.
  • Recruit kirana, transit, utility and rural-service merchants where feature-phone users have frequent low-ticket payment needs.
  • Use assisted onboarding through agents, retail stores and merchant networks to build PIN, SMS-flow and fraud-awareness familiarity.
  • Bundle payments with recharge, bill pay, remittances and government-benefit use cases to create repeat transaction behavior.
  • Push for clearer offline-payment consumer-protection, dispute-resolution and transaction-limit standards with banks and NPCI.