Zomato has started applying a new fee for customers choosing to pay cash on delivery (COD), marking a further push to diversify revenue streams and encourage digital payments in India’s competitive food delivery sector.
- Zomato levies new fee on select cash-on-delivery orders.
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What happened
Zomato has introduced a fee applied to certain orders paid via cash on delivery, with charges varying between Rs 5 and Rs 21. This fee is separate from platform, delivery, packaging, and applicable taxes, effectively making COD a premium payment choice. The measure adds new revenue for Zomato while increasing cost transparency for its consumers.
This latest fee follows earlier platform fee hikes made by Zomato this year, signaling a deliberate strategy to bolster profitability. The company aims to recover handling and operational expenses associated with COD payments and reduce risks linked to cash transactions. This adjustment reflects an ongoing trend in the food delivery market towards incentivising prepaid digital payments.
Why it matters
As India’s food delivery space becomes more crowded, Zomato’s introduction of a COD fee marks a notable push to monetise every aspect of customer orders. By discouraging cash payments through additional charges, Zomato hopes to reduce costs and improve order safety, while also encouraging adoption of cost-efficient digital payment methods.
This move comes amid intensifying competition from players like Flipkart, Rapido, and Swish, which are launching new offerings and expanding rapidly. Zomato’s fee strategy demonstrates an effort to maintain its market dominance and secure healthier margins, which are crucial in a sector known for high operational costs and thin profits.
What to watch next
Industry watchers will be monitoring customer reactions to the COD fee and whether users migrate towards prepaid options or consider rival platforms offering different payment incentives. The fee could also influence restaurant partnerships and overall order volumes if perceived as an additional burden.
Additionally, the broader Indian startup ecosystem showed signs of funding rebound last week, with $321.9 million raised despite fewer deals. This uptick in investment, alongside regulatory and competitive developments, will shape the growth trajectory of food delivery and related tech businesses in India over the coming months.