PhonePe has revealed its intention to introduce a Unified Payments Interface (UPI) solution targeting new feature phone users in India. The digital payments and financial services provider announced that this forthcoming payment system will utilize the UPI 123PAY technology developed by the National Payments Corporation of India (NPCI). Additionally, the service will be based on Gupshup’s GSPay technology stack, aiming to incorporate essential UPI functionalities for users of basic feature phones. The rollout of this service may take several quarters before it becomes available nationwide.
Development of PhonePe’s UPI Solution on GSPay
In a recent press release, PhonePe disclosed that it has acquired the intellectual property associated with Gupshup’s GSPay technology. The company aims to customize this platform to create its UPI solution. Gupshup originally unveiled GSPay in 2023 as a SMS-based payment option tailored for feature phone users.
PhonePe emphasized that GSPay adheres to the NPCI’s UPI 123Pay service, which was introduced in 2022 under the leadership of former RBI Governor Shaktikanta Das. The adaptation of GSPay’s technology stack is central to PhonePe’s plans for its UPI offering.
UPI 123Pay functions as a real-time payment solution that operates without the need for Internet access, specifically designed for feature phone users and areas with limited connectivity. It encompasses four transaction methods: interactive voice response (IVR) calls, app-based services, a missed call feature, and a sound-based proximity payment system.
PhonePe’s upcoming UPI solution is expected to include a variety of features such as person-to-person (P2P) transfers, offline QR code payments, and the ability for users to receive funds from other UPI accounts via their mobile numbers or self-generated QR codes. The goal is to establish comprehensive payment interoperability between feature phone and smartphone users across India.
Pointing to the potential reach of the UPI solution, PhonePe referenced industry statistics indicating there were 240 million feature phone users in India in 2024. Additionally, the company anticipates that 150 million feature phones will be shipped over the next five years. “This segment of users has historically been underserved by the digital financial industry and the broader startup ecosystem,” remarked Sameer Nigam, Co-Founder and CEO of PhonePe.
