The National Payments Corporation of India started controlled trials in Bihar this month that let feature-phone kirana merchants authenticate incoming UPI collect requests through voice-delivered one-time passwords on the 123PAY interactive voice response stack, after Patna and Gaya district cooperative banks documented SMS OTP failures during evening tower maintenance, according to NPCI circulars shared with sponsor banks and two merchant associations in the state.

How the handoff works

Under the pilot, a customer initiates payment to a merchant’s UPI ID from any smartphone app. When the merchant uses a feature phone without data, the sponsor bank triggers a secured outbound IVR call to the shop’s registered mobile number. The merchant hears the payer name, amount, and last four digits of the virtual payment address, then speaks or keys a voice OTP to approve or decline—mirroring 123PAY’s existing onboarding flows that already use IVR numbers such as 080 4516 3666 for registration.

Voice OTP complements, rather than replaces, UPI PIN entry on the payer side. NPCI engineers said the goal is to close a gap where shopkeepers missed collect notifications because SMS gateways throttled messages in rural cells with only 2G bearers.

Why Bihar first

Bihar’s mix of feature-phone merchants and rising smartphone payer base made it a stress testbed. State-level business correspondents reported that kirana owners often share one handset among family members; a spoken challenge reduces mistaken approvals compared with SMS forwards inside crowded shops. Hindi and Bhojpuri voice prompts were recorded with Patna linguists after field tests showed generic Hindi TTS confused amounts above one thousand rupees.

Sponsor banks limited the pilot to merchants with daily UPI inflows under fifty thousand rupees and no prior fraud flags—a conservative cap aligned with RBI’s broader push to harden 123PAY after transaction limits rose to ten thousand rupees per payment.

Security and compliance

NPCI’s risk team mandated replay windows under thirty seconds and tied voice OTP issuance to the same NPCI switch records that log smartphone collect requests. Merchants cannot approve transactions after three failed voice attempts; the collect expires and the payer receives a failure notification. Banks must store call metadata for dispute investigations, similar to existing 123PAY IVR logs.

MeitY and RBI observers asked whether voice OTP introduces social-engineering risk—someone impersonating a bank on a parallel call. Pilot training materials instruct merchants to hang up if a second caller requests PINs; only the automated 123PAY voice should reference the exact rupee amount.

Relationship to Aadhaar OTP onboarding

RBI’s recent requirement for Aadhaar OTP during 123PAY registration remains unchanged. Voice OTP applies at transaction time for merchants, not during customer onboarding. NPCI said it would evaluate whether voice challenges could later help feature-phone payers authorize high-value bills without smartphones, but that scope is not in the Bihar merchant pilot.

Infrastructure dependencies

Trials depend on telco voice quality in districts where BSNL and private operators share towers. When IVR calls failed to connect in flood-affected blocks last week, fallback SMS OTP still applied for merchants with dual-SIM smartphones—a hybrid the pilot allows but does not optimize for. NPCI metrics teams will compare approval latency against pure SMS baselines through October.

What merchants said in early sessions

Patna wholesaler cooperatives reported fewer missed sales when evening power cuts killed shop Wi-Fi but not voice circuits. Skeptics worried about background noise in open-air mandi stalls; engineers adjusted prompts to repeat amounts twice and require a spoken confirmation keyword.

Scale path

If Bihar metrics hit NPCI’s fraud and success-rate thresholds, voice OTP could roll to Uttar Pradesh and Madhya Pradesh merchant cohorts before fiscal year end. Payment aggregators must update switch integrations to request voice challenges—work Paytm and PhonePe backend teams said is underway but not yet in production outside the pilot BIN ranges.

Broader UPI narrative

India’s UPI growth increasingly depends on inclusivity for the roughly forty crore feature-phone subscribers RBI cited at the 123PAY launch. Voice OTP for merchants is a narrow fix, but it addresses a real operational failure mode—missed SMS in tier-three cells—that can silently choke acceptance even when payers carry the latest apps.