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Walmart-owned fintech major PhonePe has launched UPI payments for feature phones, mobile phones that handle basic calling and text messaging, enabling them to make digital transactions without requiring an internet connection. With the launch, PhonePe claimed to have become the first major third-party application provider (TPAP) to extend UPI payments to feature phone users at scale. The company said that its new service, dubbed PhonePe UPI 123Pay, will bring UPI capabilities to more than 20 Cr feature phone users in the country. The service will come pre-installed on feature phones manufactured by Nokia, HMD, Lava International and Itel Mobile, which is owned by Transsion Holdings. PhonePe said it plans to add more handset partners in the coming months. PhonePe UPI 123Pay uses an SMS-based architecture, processing transactions in areas with limited 2G connectivity. Users will be able to make P2P (peer-to-peer) transfers using mobile numbers or UPI IDs and pay merchants through UPI IDs and QR codes on camera-enabled devices. To help users activate the service, PhonePe has also launched a voice-first, AI-powered helpline that offers assistance in English and 12 Indian languages. Users can register for the service directly on compatible feature phones by selecting their bank, entering the last six digits and expiry date of their debit card, and setting a UPI PIN. “Bringing UPI to feature phones through PhonePe UPI 123Pay extends the benefits of digital payments beyond smartphones to every corner of the country,” said Sameer Nigam, founder and CEO of PhonePe. For context, the RBI announced the introduction of UPI123Pay, the offline version of UPI in 2022. UPI123Pay works primarily on IVR technology, and the process is automated in terms of carrying out transactions. To foray into this space, PhonePe had acquired Gupshup’s proprietary technology GSPay in June 2025. Back then, it had revealed plans to customise the freshly bought GSPay IP to launch its own UPI-based payment solution for feature phones. The launch comes as digital payment companies look to expand UPI adoption beyond smartphone users, particularly in rural and semi-urban parts of the country where smartphone penetration and reliable internet connectivity remain inconsistent. Meanwhile, UPI transaction volume rose 4% to 23.66 Bn in July from 22.72 Bn in June, as per data released by the National Payments Corporation of India (NPCI), of which PhonePe and Google Pay continue to dominate the UPI ecosystem. PhonePe processed the highest 1,085.8 Cr transactions worth ₹14.4 Lakh Cr during the month. PhonePe filed the updated draft red herring prospectus (UDRHP) with SEBI for its IPO in January this year. However, it paused its public listing plans in the months that followed, stating volatility in the global equity markets. The fintech major’s net loss widened by 62% in FY26 to ₹2,792 Cr from ₹1,727.4 Cr reported in the previous fiscal year. Operating revenue rose 11.5% to ₹7,920.5 Cr in the year under review from ₹7,105 Cr in FY25.
document fetched 2026-09-01 02:51 · canonical https://inc42.com/buzz/phonepe-launches-upi-payments-for-feature-phones