The raise: PhonePe raised $350 million at a $12 billion valuation as the Indian digital payments provider embarks on major fundraising plans to branch out into new products, according to a press release.

• The investment is the first tranche of fundraising aimed at securing up to $1 billion. The second tranche is expected to close next month.
• Bengaluru-based PhonePe will spend the funds on infrastructure, like developing data centers and growing its financial services offering to include investing and insurance.

The background: Walmart-owned PhonePe has shifted strategies in recent months, separating from parent Flipkart and moving its headquarters from Singapore to India.

• It has already enjoyed huge success on India’s Unified Payments Interface (UPI). PhonePe enabled the biggest share of UPI transactions by volume in December, beating Google Pay and Paytm, per NPCI data.
• Now, it wants to boost financial inclusion and expand access to borrowing in the country by letting customers make payments with credit on UPI.

Path to super app status? PhonePe is diversifying because of incoming rules that will limit the payment volume that firms can process via UPI, potentially slashing its revenues. Broadening its services will help the firm offset any potential losses.

PhonePe is also trying to get ahead of intensifying competition in India’s rapidly growing digital payments market, which includes Amazon Pay and a raft of international and homegrown banks.

• It bought wealth management firms WealthDesk and OpenQ in May.
• And it’s reportedly been mulling a move into buy now, pay later (BNPL) with a deal for ZestMoney.

PhonePe's plans to expand into insurance, wealth management, and lending will also help it diversify, and tech investments should improve its products.

The bottom line: PhonePe stands to bulk up its revenues by capitalizing on its vast reach—1 in 4 consumers in India use it—if it can get customers to embrace investing and insurance products. That will also help give it an edge against major rivals like Google and Amazon as it builds out what could become a super app.

This article originally appeared in Insider Intelligence's Payments Innovation Briefing—a daily recap of top stories reshaping the payments industry. Subscribe to have more hard-hitting takeaways delivered to your inbox daily.

• Are you a client? Click here to subscribe.
• Want to learn more about how you can benefit from our expert analysis? Click here.