UPI for feature phones launched, no internet connection needed: how it works

UPI payment system so far has been limited to smartphones with internet connections.

  • RBI has introduced a new digital payment mode UPI 123Pay for feature phones
  • All features of UPI except the scan and pay option will be available on feature phones now
  • Individuals need to link their bank accounts with feature phones to use the UPI 123Pay facility

UPI has disrupted digital payments across the country as it eliminated the need to carry a card or physical currency. On Tuesday, the Reserve Bank of India (RBI) introduced a new digital payment mode called UPI 123Pay for feature phones. Up until now, the UPI system has been limited to smartphones with an internet connection. Apparently, there are over 180 crore mobile users in India, of which, 78 crore use smartphones, and the rest use feature phones. RBI is finally catering to a massive segment of feature phone users in the country who have been unable to perform digital transactions just because they do not own a smartphone.

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UPI123Pay will digitally empower millions across the country and help NPCI achieve its dream of billion-plus daily UPI transactions,” said Biswamohan Mahapatra, chairman, National Payments Corporation of India (NPCI).

How does UPI for feature phone work?

UPI123 Pay will allow feature phone users to make transactions via UPI. All features except the scan and pay option will be available on feature phones as well much like smartphones. Interestingly, the new digital payment mode doesn’t need an internet connection for transactions. Individuals need to link their bank accounts with feature phones to use UPI 123Pay facility. It has options for various payments- such as person to person to the merchant. UPI 123Pay will be available in Hindi and English.

We believe the innovative functionalities offered on feature phones will provide a push to UPI in various geographies across the country and will transform the way payments are perceived,” Mahapatra added.

As said, UPI has become one of the most used payment systems in India in recent years. In terms of volume transactions, it is said to be the single largest retail payment system in India. “While we have been growing impressively in digital payments, a large part of digitisation is limited to people with smartphones. There are about 40 crore feature phone users who had limited access to digital payments,” said T Rabi Sankar, RBI deputy governor.

This move is to further popularise the use of digital payments has proposed to introduce a framework for retail offline payments across the country. The background of this announcement comes from a series of successful pilot tests. The learning of these tests strongly suggests that there is more wiggle room for digital payment-related solutions, especially in the remote parts of the country. With this development, the RBI is optimistic about increasing the ease of doing business in India along with more innovative fintech opportunities to capitalise on,” said Nitin Mathur, CEO, Tavaga Advisory Services.