Is there a market for people to make payments from their phone—even if it’s not a smartphone and there is no Internet connection? The India-based fintech PhonePe is exploring that notion through the introduction of UPI 123Pay, a service that enables Unified Payments Interface (UPI) transactions for users without an Internet connection.
UPI is the largest instant payments system in the world, accounting for four out of five real-time payments in 2025.
PhonePe has partnered with feature phone manufacturers Nokia, HMD, Lava International, and Itel Mobile to preload the service on their feature phones, or dumb phones as they are commonly called in the U.S. While the devices have turned into a retro fad in the U.S., akin to people buying stereo turntables, they remain a popular option in areas such as India, where more than 200 million people carry them.
The Feature Phone Market
PhonePe claims it is the first major third-party application provider to extend digital payment capabilities to Indians who may not have access to smartphones or reliable mobile data.
“It’s a significant expansion for PhonePe and the UPI network, enabling digital payments to an even broader segment of customers,” said Ben Danner, Lead Analyst, Debit at Javelin Strategy & Research. “I could see this technology being useful in other regions that are predominantly cash reliant but not averse to digital payments.”
In 2024, approximately 15% of handsets sold globally were feature phones—nearly 210 million devices, according to CNN. India is the largest market for them, but they are also popular in Bangladesh, Indonesia, and other developing economies across Asia and Africa.
The payment service may even find a use case in North America, where 1.7 million feature phones were sold in 2024.
“After everyone pushed into smartphones, some people who are trying to escape the digitalization of everything go back to the old Razr-type phones with limited functionalities,” said Danner.
Maximizing the Features
The service seeks to maximize the benefits available from the limited features available on such phones. Users can send money to other people using mobile numbers or UPI IDs and make payments to merchants through UPI IDs. The service also allows users to check account balances, manage their accounts, and view transaction histories. The SMS-based architecture is designed to ensure that transactions go through even in areas with limited 2G connectivity.
PhonePe said future updates will add bill payments, recharges, and onboarding to UPI. PhonePe is the leading processor in India’s UPI market by transaction volume, handling more than 10 billion UPI transactions in July 2026.