Food delivery company Swiggy recently introduced a 2% collection fee on all restaurant orders. Swiggy said the fee will be charged to facilitate online payments from customers on its platform.
According to a YourStory report, The company communicated this new policy via email to several partner restaurants. The new fee will be effective from December 20, 2023, the report added.
Why Swiggy is charging 2% collection fee?
A spokesperson from Swiggy confirmed the implementation of the collection fee, explaining that it is a standard industry-wide practice. The fee is intended to cover the costs incurred by Swiggy for smooth payment processing. It’s noteworthy that this fee will only affect restaurants that currently do not have a collection fee in place.
Is Zomato also charging a collection fee?
The development comes several years after its rival, Zomato, introduced a similar payment gateway fee of about 1.8% on all orders. Industry insiders note that such charges, typically comprising a commission plus payment gateway fees, are common practice in the sector.
IPO preparation
The introduction of the collection fee is part of Swiggy’s broader strategy to achieve positive financial growth as it prepares for an initial public offering (IPO) anticipated between July and September next year. Earlier, Swiggy, along with Zomato, had introduced a platform fee of Rs 2-3 per order for customers, aiming to improve unit economics.
Financially, Swiggy has shown significant growth, with a 17% increase in its food delivery business, achieving a gross merchandise value of $1.43 billion in the first six months of the year, and turning profitable for the first time in March.
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