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No, there was no dedicated signalling pipeline between the exchange and the payphone. This was widely exploited with the 2600hz noise that the old phreak boxes used to generate and thus have free calling.

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Signalling was in band, but still additional --- the exchange didn't play tones down to my house phone to cut the mic until i put in more coins, but they would at the payphone. 2600Hz tone is a bit different, that was used to close one end of a long distance circuit (and then you could play tones to open a new end), but you had to get onto a long distance circuit first.

There were, of course, ways to play the coin insert tones.

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