UPI 123 – Aims to bring Digital Financial Inclusion to Feature Phone Users

But TRAI’s recent Tariff Amendment to bring USSD tariffs to ZERO could also give a boost to feature phone banking users

In March 2022, the Reserve Bank launched the UPI123Pay – which aims to bring the Unified Payments Interface (UPI) payments to feature phone users and include them in the digital payments eco-system.

In April, the Telecom Regulatory Authority of India (TRAI) introduced a tariff amendment to eliminate all charges for use of Banking services on USSD dialing code *99#, which was introduced in 2012 but was slow to take off, though it is still in use.

The UPI 123 services will reach out to the estimated 450 million feature phone users in the country – mostly on 2G networks of Airtel, BSNL, and Vodafone Idea.

UPI-123Pay aims to make the digital payment value of the UPI stack (currently available only on smartphones) to feature phones. There are 4 solutions going live according to the National Payments Corporation of India, NPCI.

• Payment through an Interactive Voice Response (IVR) number
• Payment through a missed call
• Payment through an app like a feature from the Device maker
• Payment through a Sound-based technology

UPI payment through pre-defined IVR numbers would require users to initiate a call from their feature phone to a predetermined number and complete UPI on-boarding formalities to be able to start making financial transactions without an internet connection.

The total revenue generated through USSD mobile banking sessions in the country is quite small at approximately 0.00007% of the total revenue of the industry.

The IVR will provide multiple language options for customers to choose their preferred language. IDFC First Bank, City Union Bank & NSDL Payments bank has gone live on IVR payments. Ultracash & ToneTag are technology solutions providers.

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The UPI – 123 feature can also be used through a missed call.

Feature phone users can access their bank account and perform routine transactions such as receiving, transferring funds, regular purchases, bill payments, etc., by giving a missed call on the number displayed at the merchant outlet. The customer will receive an incoming call to authenticate the transaction by entering UPI PIN.

UPI – 123 has another interesting option: Proximity Sound-based Payments (that is, the use of sound waves to enable contactless, offline, and proximity data communication on any device). All of this is expected to be a huge boon for non - smartphone users.

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Further, there are over 25000 villages that still remain without any mobile network connectivity (refer to V&D March issue Aatmanirbhar). These villages would take the first steps using feature phones.

By Voice&Data team

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