Hotel industry body cautions restaurants over Zomato Pay, Swiggy Diner programmes

The National Restaurant Association of India (NRAI) on Friday cautioned the restaurant fraternity to exercise caution before choosing to be part of the new Zomato Pay and Swiggy Diner programmes, calling those "bizaare".

The NRAI said in an advisory that customers are dazzled into settling their bills via either Zomato Pay or Swiggy Diner "because of the deep discounts and generous cash backs that comes with it; it is a deal too good to refuse at no cost".

However, restaurants will now compulsorily offer discounts in the range of 15-40 per cent to every customer who chooses to settle their bills through these payment gateways.

"This discount is borne entirely by the restaurant. Restaurants pay a commission of 4-12 per cent (to begin with and this may move upwards as soon as adaption numbers grow) for permitting them to have Zomato/Swiggy's payment gateways at their restaurants when several alternate options are available for much cheaper. Isn't that bizarre?" said the NRAI, which represents more than five lakh restaurants in the country.

As a point of reference, other payment gateways charge between 1 to 1.5 per cent on such transactions.

"After being denied ownership of essential data of restaurant's "delivery" customers, this will now open the flood gates for middlemen to colonise "dine-in" data. Your customers will eventually firmly become 'their' customers," warned the NRAI.

Zomato or Swiggy were yet to react to the NRAI advisory.

The NRAI said that Zomato and Swiggy will get a firm foothold in the dine-in business, after squeezing the last drop of revenue from the delivery business.

"Based on how this played out with the delivery market, what is perhaps most dangerous is the long term, irreversible effects that this has on the dine-in market: unsustainable discounts coupled with a platform wedged firmly between you and your customer," said the hoteliers' body.

Zomato is also selling "Zomato Vibes" with "Zomato Pay" which is in essence a social engagement tool.

The Zomato Gold programme was launched in November 2017 as a dine-in only programme with "the lofty promise" of matching premium customers to a curated set of premium restaurants.

This led to the #Logout movement on August 15, 2019 during which thousands of restaurants all over the country decided that they had enough of this no-win proposition. This eventually led to the death of Zomato Gold.

"Zomato Pay and Swiggy Diner both operate broadly on the same construct. This brings no tangible value to restaurants. It does not solve any pressing problems of the industry either," said the NRAI.