Zomato, the foodtech giant, has now launched its own UPI service for P2P and merchant transactions as part of its ongoing experiments.
Zomato UPI allows customers to create a new UPI ID within the app, enabling them to make payments without being redirected to other apps like Google Pay or PhonePe, as some users currently experience.
According to a knowledgeable source, Zomato is optimistic about customers embracing the new system and increasingly choosing UPI payments instead of cash on delivery (COD) orders. COD orders pose challenges in management and entail additional expenses for handling cash, which Zomato aims to eliminate. Moreover, there is a risk of customers rejecting an order if they have selected the COD option.
According to sources familiar with the matter, Zomato UPI has been a highly anticipated feature requested by customers for quite some time. Earlier this year, the Gurugram-based company obtained regulatory approvals and subsequently teamed up with ICICI Bank, one of the leading private banks in the country, to establish the necessary technological infrastructure for Zomato UPI.
Currently, Zomato UPI is being implemented as a pilot program. The future course of action will depend on factors such as the rate of adoption by users and the level of customer loyalty. Based on these considerations, the company will determine whether to collaborate with additional banks or proceed with a gradual expansion of the service.
Additionally, it is worth highlighting that Zomato UPI will enable the company to exercise greater control over the success rate of payments, reducing reliance on third-party apps and their functionality. This increased control has the potential to enhance customer satisfaction, particularly during a period when the food delivery market is experiencing a slowdown.
Confirming the development a company spokesperson said, “Zomato has a large set of customers that frequently use UPI to make payments for their food orders. We are providing a facility (as technology partner to ICICI) for customers to create a UPI id on Zomato app so that they can make payments seamlessly (without the need to switch apps).”
Given that PhonePe, Google Pay, and Paytm collectively dominate around 97 percent of the UPI market as of April, reducing reliance on these apps was particularly vital. Other players like WhatsApp Payments, which initially gained traction but struggled to maintain their position after the discontinuation of coupons and offers, accounted for the remaining approximate three percent.