AatmaNirbhar Bharat: Now UPI Payments Through Feature Phones, RBI Launches UPI123Pay

The new features allow users to process UPI payments without a smartphone and internet connection.

In a step that is expected to provide a massive boost to the digital payment ecosystem in the country, the Reserve Bank of India (RBI) Tuesday (March 8) launched UPI123Pay, which can process UPI payments without a smartphone and internet connection.

On November 8 last year, the RBI Governor Shaktikanta Das had said that the central bank would soon launch UPI for feature phones. "In order to further deepen digital payments and make them more inclusive, ease transactions for consumers, facilitate greater participation of retail customers in various segments of the financial markets and enhance the capacity of service providers, it is proposed to launch UPI-based payment products for feature phone users leveraging on the Reserve Bank's regulatory Sandbox on Retail Payments, Shri Das had said.

The RBI had added in a statement, "India has a large mobile phone consumer base of about 118 crore mobile users (TRAI, October 2021) 1 of which about 74 crore (Statista, July 2021) have smart phones indicating that there is a significant number of feature phone users in the country. Feature phone users have limited access to innovative payment products."

Since Prime Minister Narendra Modi assumed charge in Delhi in May 2014, there has been a special emphasis on developing digital infrastructure in the country.

"To deepen financial penetration, it is important to bring feature phone users into the mainstream digital payments. In the first cohort of RBI Regulatory Sandbox, some innovators had successfully demonstrated their solutions for feature phone payments under the theme of 'Retail Payments'. These products, coupled with other complimentary solutions, will facilitate UPI-based digital payment solutions on feature phones to promote wider digitization," the RBI said.

The Union IT Minister Ashwini Vaishnaw had informed on December 15 last year that November saw a record number of digital transactions in the country, with above 423 crore transactions in the month. The value of these transactions was ₹7,56,000 crore, close to $100 billion.

The Union government is also promoting RuPay, an Indian debit and credit card. RuPay's share in the Indian debit card market is 60%, and its share in the credit card market is about 20%.

In the ongoing Russia-Ukraine conflict, US-based financial service providers Visa and Mastercard have ceased operations in Russia. Many raised concerns of what if foreign companies do such things in India?

In an interview with Moneycontrol, the former CEO of the National Payments Corporation of India (NPCI), AP Hota, said, "Indian payments system can survive on the back of its domestic card network RuPay and the Unified Payments Interface (UPI) in case of a similar scenario of foreign players pulling out of the country,"

The NPCI is the umbrella body that operates retail payment systems in the country, including UPI and RuPay. The RBI also launched a 24×7 helpline for digital payments DigiSaathi.