PhonePe, one of India’s leading digital payment platforms, has taken a significant step toward expanding digital financial inclusion by acquiring the intellectual property of GSPay, a proprietary technology stack developed by conversational engagement platform Gupshup. This acquisition signals PhonePe’s entry into the UPI for feature phones space, aiming to unlock the untapped market of millions of users still reliant on non-smartphone devices.
GSPay was originally designed to operate on NPCI’s UPI 123PAY framework, a government-backed initiative to make Unified Payments Interface (UPI) accessible on feature phones. PhonePe’s acquisition of this technology marks a deliberate move to democratize digital payments, bridging the urban-rural tech divide.
Table of contents
- Expanding the Reach of UPI Through Feature Phones
- Leveraging NPCI’s UPI 123PAY Infrastructure
- Aiming for Financial Inclusion at Scale
- Statement from PhonePe Leadership
- Key Features of the Upcoming Feature Phone UPI App
- The Role of Gupshup’s Conversational IP
- Digital Payments in India: The Next Frontier
- What This Means for the Ecosystem
- Looking Ahead: Launch Timeline and Availability
Expanding the Reach of UPI Through Feature Phones
With over 240 million feature phone users in India as of 2024 and projections indicating an additional 150 million feature phone shipments over the next five years, the opportunity to bring these users into the digital payments ecosystem is immense. Most of this user base resides in rural and semi-urban regions, where smartphone penetration remains limited due to affordability, literacy, or infrastructural constraints.
PhonePe’s upcoming feature phone UPI app—based on the GSPay stack—intends to fully support core UPI functionalities such as:
- Person-to-Person (P2P) Transfers
- Offline QR Code Payments
- Money Reception via Mobile Numbers or Self-Generated QR Codes
- UPI Interoperability with Smartphones and Other Feature Phones
By offering these features, PhonePe aims to achieve true UPI interoperability—allowing users with basic mobile phones to transact just as freely as smartphone users.
Leveraging NPCI’s UPI 123PAY Infrastructure
The new offering will operate under UPI 123PAY, an infrastructure introduced by the National Payments Corporation of India (NPCI) specifically to cater to feature phone users. UPI 123PAY provides a four-channel access model:
- IVR-Based Payments (Interactive Voice Response)
- App-Based Payments on Feature Phones
- Proximity Sound-Based Payments
- Missed Call-Based Payments
PhonePe will integrate its feature phone payment app with this UPI 123PAY backbone while building a custom user experience layer using the GSPay IP. This layered approach is expected to provide intuitive access, local language support, and simplified flows to boost adoption across digitally underserved communities.
Aiming for Financial Inclusion at Scale
With this move, PhonePe is not merely expanding its user base; it is actively contributing to India’s financial inclusion mission. Historically, feature phone users have been underserved by mainstream fintech products, often left out of the digital economy due to lack of access, tech literacy, or connectivity.
PhonePe’s entry into this space, powered by the GSPay engine, will deliver:
- Seamless onboarding for non-tech-savvy users
- Support for regional languages
- Accessibility features for elderly and semi-literate populations
- Reduced dependency on high-end mobile infrastructure
The goal is to empower every Indian, regardless of their phone type, to participate in India’s digital economy—especially when direct benefit transfers (DBTs), micro-payments, and rural commerce increasingly depend on UPI.
Statement from PhonePe Leadership
Speaking on the acquisition, Sameer Nigam, Co-Founder and CEO of PhonePe, stated,
“We are excited about acquiring the GSPay technology stack and using it to bring UPI payments to India’s extensive feature phone user base. This segment of users has been historically underserved by the digital financial industry and the broader startup ecosystem. We hope we can enable crores of these feature phone customers to participate in India’s burgeoning digital payments market.”
This statement underscores PhonePe’s long-term commitment to financial equality and its willingness to innovate beyond the traditional smartphone-first approach.
Key Features of the Upcoming Feature Phone UPI App
1. Lightweight and Optimized Interface
The new app will be designed specifically for low-resource mobile hardware, ensuring optimal performance without requiring internet access or advanced hardware capabilities.
2. Seamless Offline Transaction Support
Using UPI 123PAY and local QR generation, users can perform transactions without a live data connection, making it perfect for rural India where connectivity is sparse or unreliable.
3. Full NPCI Certification
The solution will operate under strict NPCI compliance, ensuring secure encryption, authenticated UPI transaction flow, and fraud prevention protocols.
4. Voice-Based Navigation
As an extension of Gupshup’s conversational AI capabilities, PhonePe is expected to build voice-assist capabilities, allowing semi-literate users to navigate the app or transaction process with ease.
5. Integration with Feature Phone Manufacturing
PhonePe may collaborate with OEMs of new feature phones, embedding the UPI app as a pre-installed solution to improve adoption across Tier 2, 3, and rural Indian markets.
The Role of Gupshup’s Conversational IP
The original GSPay technology, built by Gupshup, was a voice-led payment platform leveraging conversational UI paradigms. It was architected to offer menu-driven or voice-activated financial services, allowing users to perform banking tasks through a simplified conversational interface.
By acquiring this IP, PhonePe not only gains access to the foundational tech and integrations but also the UX research, datasets, and AI-driven decision frameworks necessary for scaling it across a complex and diverse user base.
Digital Payments in India: The Next Frontier
India’s digital payments sector is entering a phase of infrastructure maturity. As UPI transactions soar past 1,200 crore per month, it’s clear that the next wave of growth must come from untapped user segments. By targeting the feature phone ecosystem, PhonePe is betting on a high-volume, low-cost, and high-impact growth strategy.
Other players in the fintech ecosystem may follow suit, but PhonePe’s first-mover advantage, combined with GSPay’s rich conversational infrastructure, gives it a unique head start.
What This Means for the Ecosystem
- Banks will see increased engagement from underbanked demographics.
- Merchants in rural areas can now accept UPI from all customers, not just smartphone users.
- UPI’s market penetration will accelerate across all socioeconomic strata.
- Government welfare schemes can more efficiently reach beneficiaries who previously could not transact digitally.
Looking Ahead: Launch Timeline and Availability
PhonePe’s feature phone UPI app is expected to roll out in phases over the coming quarters, beginning with pilot programs in select geographies before scaling nationally. The phased approach will allow PhonePe to test network performance, user behavior, and ecosystem readiness in real-world rural conditions.
PhonePe may also seek partnerships with rural banks, microfinance institutions, and government programs to integrate its solution more deeply into the financial lives of India’s unbanked and underbanked.
PhonePe’s acquisition of the GSPay IP and its plans to launch a UPI-enabled feature phone application is a significant milestone in India’s digital journey. By making UPI payments available on even the most basic mobile devices, PhonePe is laying the foundation for true financial inclusion, ensuring that every Indian—regardless of tech access—can be a part of the digital economy.
This bold move reflects not just a business strategy, but a nation-building mission to bring millions more into the digital fold.