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PhonePe has launched UPI 123Pay, allowing over 200 million feature phone users to make digital payments without internet access. The service uses NPCI’s SMS-based UPI protocol and supports money transfers, merchant payments, balance checks and transaction history. It aims to expand digital financial inclusion in rural and semi-urban India.

PhonePe has rolled out UPI 123Pay, a service enabling India's 200 million-plus feature phone users to make digital payments without needing an internet connection. The company becomes the first major third-party application provider to extend UPI payments to feature phone users across the country.

The service targets last-mile access gaps in rural and semi-urban India, where smartphone penetration and reliable internet remain inconsistent. Founder and CEO Sameer Nigam said the launch reflects what building for India actually means, meeting people where they are, adding that the goal is to onboard the next 300 million users into the digital financial fold.

How does PhonePe UPI payments work on feature phones?

The app runs on the UPI 123 protocol, developed by NPCI specifically for feature phones that lack internet or data capability but support SMS. The system relies on an SMS-based architecture designed to function even in areas with limited 2G connectivity. Nigam noted that while the experience differs slightly from smartphone payments since not all feature phones have cameras, security levels remain the same.