PhonePe has introduced an SMS-based payment service for feature phones, allowing users to make UPI transactions without needing internet access. By partnering with manufacturers like Nokia and Lava, the firm is expanding its reach into the non-smartphone user base. As an unlisted company, PhonePe continues to prioritize user acquisition despite reporting a net loss of ₹2,792 crore for FY26.
On August 31, 2026, PhonePe officially launched an SMS-based UPI service designed specifically for feature phone users. This initiative, built on the Reserve Bank of India’s (RBI) UPI 123Pay framework, allows customers to perform financial transactions including peer-to-peer transfers, merchant payments, and balance checks without requiring an active mobile internet connection. The service is being rolled out via pre-installed software on devices from manufacturers such as Nokia, HMD Global, Lava International, and itel.
Strategic Expansion and Market Context
The move is a calculated effort to penetrate the segment of the Indian population that remains outside the smartphone ecosystem. By removing the dependency on mobile data, the company aims to reduce technical barriers for millions of potential users. This follows the company's recent strategic moves to integrate new technology stacks, such as the GSPay infrastructure, to speed up deployment. The service also includes a multilingual voice helpline to assist users with onboarding, reflecting the company’s focus on easing the learning curve for new digital payment adopters.
Financial and Operational Reality
For investors and market observers monitoring PhonePe as an unlisted entity, it is important to balance this growth strategy against the company’s current financial health. In its financial results for the 2026 fiscal year (FY26), the company reported a consolidated revenue of ₹7,920 crore. However, this growth came with a net loss of ₹2,792 crore, reflecting the high operating costs associated with rapid expansion and investment in new product verticals. The company currently holds a strong position in the Indian UPI ecosystem with a market share of approximately 45-48%, making it a dominant player in the digital payments space.
Risks and Future Monitoring
The expansion into the feature-phone market carries inherent risks. While the move helps in user acquisition, the company must manage the cost of supporting these services while navigating a complex regulatory environment. Past regulatory changes, such as restrictions on specific payment categories like real-money gaming or credit card-based rent payments, have historically impacted revenue streams. Furthermore, as PhonePe is not a publicly listed company, shares are not traded on the NSE or BSE, meaning investors in unlisted equity face liquidity risks and less price transparency compared to listed peers. Moving forward, the key monitorable will be the rate of adoption for this feature-phone service and whether the company can maintain its user base growth while managing the pressure to achieve sustainable, non-subsidy-dependent profitability.