Swiggy Now Includes Non-Metro Eateries in Its Gross Value Service Fee Policy

Nitin Konde, Bhoraniya Huda Hifzur Rehman

Aug 16, 2024 — 2 min read

Swiggy Now Includes Non-Metro Eateries in Its Gross Value Service Fee Policy

A renowned media house has reported that food tech company Swiggy, which is preparing for an initial public offering (IPO), has expanded its service fee policy to incorporate the gross order value (GST plus packaging fees) for restaurants located outside of metro areas. As a result of the change, its restaurant partners in those areas will earn a higher commission.

In the past, restaurants in bigger cities were already charged a service fee (also called a commission) based on the gross value of their operations, whereas smaller towns and cities had to figure it out using the net value.

How This Move Will Be Implemented?

The service fee will be applied to the gross value of each order by Swiggy starting August 14, in accordance with the merchant conditions. The business informed its restaurant partners in a letter that the service price owed to Swiggy will slightly rise due to this adjustment being implemented evenly across the platform.

The study states that around 1,000 eateries will be impacted by this regulation shift. "Contracts are usually tailored individually, but this latest update will be implemented for around 1,000 partners at this stage," another media house reported in its recently published article.

It is usual protocol, according to a Swiggy representative, to communicate with a select set of partners after negotiations; this is because each partner has a customised business agreement that is tailored to their specific needs.

In contrast to Swiggy, which normally charges restaurants a commission of 17–25%, Zomato, an industry rival, charges payment gateway costs independently.

Disputes Arise Around Commission Uniformity

Swiggy has around 350,000 restaurants listed on its network. The move is to standardise prices on gross value orders across all of them. Nevertheless, numerous restaurant partners will be impacted, thus the adjustment has ignited a discussion.

Sustainable techniques that are good for delivery services and restaurants alike should be seriously considered. Gaining market share through raising discounts or commissions alone might not be sustainable.

Brand value, order numbers, and other indicators are usually considered during individual contract negotiations between meal delivery platforms and restaurant partners.

There is constant debate over the commission that meal delivery companies like Zomato and Swiggy charge because of the substantial effect it has on restaurants' bottom lines.

Easing the Payment Services

The newly integrated Unified Payments Interface (UPI) Plug-in service was introduced by Swiggy on Wednesday. This service is powered by the National Payments Corporation of India (NPCI) and Juspay.

This functionality, which is marketed as Swiggy UPI, enables clients to make payments more quickly from within the app, thereby lowering the amount of time it takes to complete a transaction from more than 15 seconds to only five seconds.