UPI 123 Pay : Democratising Retail Payments for Small Merchants

Read to know how UPI 123 Pay can ease the lives of small merchants in India.

For financial inclusion of the feature phone users in India, RBI has recently launched UPI for the non-smartphone users in India to further deepen and democratise the digital payment network, especially in rural areas. Although India is on the cusp of the smartphone revolution but has a sizeable number of people who use feature phones. According to Statista’s reports, out of a total of 118 crore mobile users in India, around 44 crore people yet use feature phones and 74 crores have a smartphone with them in the country. The UPI 123 Pay will enable users of the lower economic strata of our society to effectively use digital payment who cannot afford smartphones to access UPI.

People from rural India are aware of UPI payments but want to stick to feature phones, also if they own a smartphone as a second device they do not want to keep it solely for making digital payments. 


According to Statista’s reports, out of a total of 118 crore mobile users in India, around 44 crore people yet use feature phones and 74 crores have a smartphone with them in the country.

How does UPI 123 Pay work? 

UPI 123 Pay differs from standard UPI which allows users to integrate their feature phones with bank accounts to pay digitally without internet connectivity. This payment system does not require any QR scan code to pay. 

Digital payments through UPI 123 Pay is a three-step process of the call, choose and pay. Through its voice-based system or IVR, users need to call 080 4516 3666 a number provided by NPCI, select their preferred language, tap the ‘1’ key on the phone to transfer money, confirm the bank name through voice-based command, again tap the ‘1’ key to transfer the amount, enter recipient’s mobile number and the amount followed by the UPI PIN to authorise the transfer. The UPI PIN can be set up on the call through debit card details before transferring the amount. 

There are three more ways to transfer payment: 

  • The second mode of payment is through an app-based channel where app functionality is offered in a feature phone.

  • The third mode of payment is through sound proximity where the technology is based on sound waves to enable contact and networking to make contactless payments.

  • The fourth mode of payment can happen through a missed call where users can send a missed call and will get back a call to authenticate by inputting a UPI pin and carrying out the payments.

The central bank has also launched a 24*7 helpline for digital payments – DigiSaathi

How will UPI 123 Pay benefit small businesses? 

For small merchants in India, the launch of UPI 123 Pay is poised to become a gamechanger, since the payment settlement time through cheques takes up to 48 hours, and if there are bank holidays, festival holidays, or weekends the settlement period might extend up to 6 days. Hence, managing cash becomes cumbersome. 

Also, this feature in non-smartphones will allow the SME business to flourish, explore more new markets, channels that took a backseat for not using digital payments. The UPI 123 Pay makes the facilities under UPI now accessible to the lower rungs of the society which were so far excluded from the digital payment landscape.

Shalmoli Sarkar
Shalmoli Sarkar
An MBA in marketing and a BTech in chemical engineering, Shalmoli writes on marketing strategies and business technology for new and aspiring entrepreneurs.

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