After Zomato, Swiggy to charge restaurants collection fee to facilitate online payments from customers

Food and grocery delivery platform Swiggy is set to charge restaurants a collection fee of 2% on all orders to facilitate online payments from customers on the platform.

Swiggy informed several restaurants this month about the fee, which will be implemented from December 20.

The fee is a payment gateway charge to enable the collection of online payments on behalf of the restaurant. 

“Effective from 20th December 2023, we will be charging a standardised 2% collection fee on all orders. This fee is for facilitating seamless customer payments on the Swiggy platform. Please note that this amount will be deducted from your payouts,” Swiggy told some restaurants over email.

YourStory has seen the email.

A spokesperson from Swiggy confirmed the development.

“Swiggy charges its restaurant partners a collection fee to facilitate smooth payments from our customers on the Swiggy platform. Swiggy incurs this charge, and passing it on is a standard industry-wide practice. This is not new, and only restaurants that do not currently have a collection fee are being charged this amount,” the spokesperson said.

Swiggy’s move comes nearly four to five years after rival Zomato introduced a payment gateway fee of about 1.8% on all orders, according to two persons in the know.

“Zomato’s charges to restaurants consist of a commission plus payment gateway charges with both listed separately. Earlier, it may have been part of Swiggy’s calculation in the commission. It’s standard practice,” said one of the persons quoted above.

The development comes at a time when Swiggy is gearing up for an initial public offering between July and September next year, according to a Reuters report.

Earlier this year, Swiggy and Zomato introduced a platform fee of Rs 2-3 per order for customers, in a bid to improve unit economics.

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Last week, the Bengaluru-based company appointed Anand Kripalu, Managing Director and Global Chief Executive Officer of packaging firm EPL Limited, as an independent director and chairperson of its board.

In February, Swiggy brought Mallika Srinivasan (Chairman and Managing Director of TAFE), Shailesh Haribhakti (Chairman of Shailesh Haribhakti and Associates), and Sahil Barua (Managing Director and CEO of Delhivery) to its board as independent directors.

Earlier this month, Prosus—one of Swiggy’s earliest and biggest backers—said in its annual report that the startup’s food delivery business grew 17%, delivering a gross merchandise value of $1.43 billion in the first six months of the year. This was led by a rise in transacting users that drove double-digit order growth and inflation in average order value, according to the Netherlands-based investor. 

This came months after the company turned profitable for the first time in March since its launch in 2014, around the time that rival Zomato reported a profitable quarter.

(The story was updated to correct a factual error)