Home / Industry / Banking /  RBI opens up UPI for feature phones, no internet needed

MUMBAI : The Reserve Bank of India (RBI) on Tuesday launched unified payments interface (UPI) for feature phones, bringing about 400 million users of such phones under the ambit of India’s homegrown payments network.

Feature phones are basic phones, which typically provide voice calling and text messaging functionalities. India has a mobile phone consumer base of about 118 crore, of which about 74 crore have smartphones, indicating that there is a significant number of feature phone users in the country.

T Rabi Sankar, deputy governor, RBI said that while India has made significant strides in digital payments, a large part of this digitization is getting limited to those who have smartphones. Since UPI has contributed a lot to India’s digital payments, it is important that UPI is available as an offline mode and on feature phones to take it to the next phase of development, said Sankar, which has been RBI’s efforts over the past two-three years.

To be sure, even before Tuesday’s launch, UPI was available on feature phones, albeit through a complicated USSD or Unstructured Supplementary Service Data mode. Under this, a feature phone user had to dial *99#, get a set of menus and initiate transactions. But the process was cumbersome, involving multiple chargeable messages.

“This is one reason we are hopeful that the products introduced today will fill in this gap and take UPI to the next level," said Sankar.

Christened UPI123Pay, the new payments system for feature phone users involves four different technologies. The first one is through use of Interactive Voice Response (IVR) numbers. One can dial a number and initiate a secured call from feature phone, and after getting registered can start financial transactions without internet connectivity.

The second module is through apps on feature phones. Majority of UPI functions will be available on apps that are available on feature phones and one can do almost all kinds of UPI transactions except scan and pay, which is still a work in progress.

The third method of feature phone UPI involves proximity sound-based payments. This technology uses sound waves to enable networking and therefore helps carry out contactless offline and proximity data communication on any device. The last method is a quintessential Indian way -- missed call approach -- where users receive a callback from a standard number to authenticate and carry out transactions.

“Going forward we will add to this list of modules," said Sankar.

RBI governor Shaktikanta Das also said that UPI has played a major role in the adoption of digital payments in India, recording about 4.53 billion transactions worth 8.26 trillion in February 2022, almost double compared to a year ago. In fact, in FY21, the total value of UPI transactions was 41 trillion.

The launch of UPI123Pay, Das said, makes the facilities under UPI now accessible to that section of the society which was so far excluded from the digital payments landscape.

“In that way it is promoting a great amount of financial inclusion in our economy," he said.


Shayan Ghosh

Shayan Ghosh is a national writer at Mint reporting on traditional banks and shadow banks. He has over a decade of experience in financial journalism. Based in Mint’s Mumbai bureau since 2018, he tracks interest rate movements and its impact on companies and the broader economy. His interests also include the distressed debt market, especially as India’s bankruptcy law attempts recoveries of billions worth of toxic assets.
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