Hospitality industry body warns restaurants against Zomato Pay and Swiggy Diner

The National Restaurant Association of India (NRAI) Friday warned the restaurant fraternity to exercise caution before choosing to be part of the new Zomato payment and Swiggy dinner programs, calling them “bizaare”.

The NRAI said in an advisory that customers are dazzled to pay their bills via either Zomato Pay or Swiggy Diner “because of the deep discounts and generous cash back that come with it; it’s too good an offer to refuse at no cost.”

However, restaurants will now be mandatorily offering discounts in the range of 15-40% to every customer who chooses to pay their bills through these payment gateways.

“This discount is entirely the responsibility of the restaurant. Restaurants pay a commission of 4-12% (to start and it can increase as the number of adaptations increases) to allow them to have the payment gateways of Zomato/ Swiggy in their restaurants when several alternative options are available for much less. Isn’t that weird?” said the NRAI, which represents more than five lakh restaurants in the country.

For reference, other payment gateways charge 1-1.5% on these transactions.

“After being denied ownership of essential restaurant ‘delivery’ customer data, this will now open the floodgates for middlemen to colonize ‘catering’ data. Your customers will eventually firmly become ‘their’ customers,” a warned the NRAI.

Zomato or Swiggy had yet to react to the NRAI’s advice.

The NRAI said Zomato and Swiggy will establish a firm foothold in the restaurant business, having taken the last drop of revenue from the delivery business.

“Based on how this has played out with the delivery market, perhaps the most dangerous thing is the irreversible long-term effects this is having on the restaurant market: discounts unsustainable associated with a platform firmly wedged between you and your customer,” the hotelier body said.

Zomato also sells “Zomato Vibes” with “Zomato Pay” which is basically a social engagement tool.

The Gold Zomato was launched in November 2017 as a restaurant-only program with “the lofty promise” of matching high-end customers to a set of high-end restaurants.

This led to the #Logout movement on August 15, 2019 in which thousands of restaurants across the country decided they had had enough of this dead-end proposition. This ultimately led to Zomato Gold’s death.

“Both Zomato Pay and Swiggy Diner operate on essentially the same build. It doesn’t deliver any tangible value to restaurants. It doesn’t solve pressing industry problems either,” the NRAI said.

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