Swiggy, the renowned foodtech giant, is reportedly poised to join the bandwagon of co-branded credit cards. Following in the footsteps of Flipkart, Myntra, and Paytm, who have already ventured into this realm, Swiggy is preparing to unveil its own co-branded credit card offering.
Sources cited in an ET report indicate that Swiggy, the popular food delivery platform, will be teaming up with HDFC Bank to launch their co-branded credit card. Mastercard is anticipated to serve as the network partner for this collaboration.
Additionally, it is reported that Swiggy plans to leverage flat discounts and exclusive offers on its hyperlocal delivery services for customers using their co-branded credit card. Moreover, the foodtech giant may extend additional discounts for Dineout, Swiggy’s restaurant bill payment service, further enhancing the benefits for cardholders.
Furthermore, the introduction of the co-branded card will serve as an additional revenue stream for Swiggy. Despite being profitable in its core food delivery business, the company continues to incur substantial losses of around $20 million per month in its Instamart venture, as reported by TechCrunch recently.
Read More: Swiggy’s strategic initiatives pay off as food delivery business turns profitable
Interestingly, Swiggy finds itself entering the credit card space relatively late, considering that Zomato has already discontinued its co-branded credit card with RBL Bank in April. The major player in the foodtech industry had introduced its own credit card back in 2020, but has now decided to discontinue it.
Read More: Zomato and RBL Bank to end co-branded credit card partnership, users to receive new cards
According to sources quoted by ET, Swiggy is strategically aiming to fill the void created by Zomato’s departure from the credit card market. The sources further revealed that Swiggy intends to launch its co-branded credit card in the coming weeks, highlighting that the company has been diligently working on this partnership since early last year.
Another individual mentioned in the story noted that Swiggy has assembled a substantial technology team dedicated to banking integrations, with the aim of expediting the product launch process.
Although credit cards serve as a robust avenue for venturing into financial services, the Reserve Bank of India (RBI) has recently imposed limitations on the role of co-branding partners. The RBI now restricts co-branding partners to solely functioning as sourcing channels for banks, explicitly prohibiting any further data sharing between these entities.
Swiggy’s decision comes at a time when the foodtech giant is strategically rearranging its pieces on the chessboard, aiming to achieve the most lucrative outcome.
In a bid to diversify its offerings, Swiggy introduced a new product earlier this year called Maxx. This platform provides a wide range of products including home and kitchen appliances, electronics, utensils, clothing, and baby care items. Currently, Swiggy is conducting a pilot program for Maxx in Bengaluru. Additionally, Swiggy has ventured into the vertical marketplace space with Minis, which focuses on offering products from various direct-to-consumer (D2C) brands and their niche offerings.
On the other hand, Swiggy has made strategic decisions to streamline its business operations. It has discontinued certain business verticals such as Handpicked, its gourmet grocery segment. Additionally, Swiggy sold its kitchen infrastructure business, Access, to Kitchens@. To optimize its workforce, the company also implemented a reduction in staff, resulting in the layoff of 380 employees earlier this year.
According to a recent report by Motilal Oswal, it is projected that Swiggy will experience a flat growth in Gross Merchandise Value (GMV) during the second half of 2022 compared to the first half of the year. The report estimates that Swiggy’s total GMV for 2022 will reach $2.6 billion. This forecast indicates that Zomato will surpass Swiggy in terms of market share, positioning itself ahead in the highly competitive food delivery market.
According to the estimates provided in the report, Zomato commanded a significant market share of 56% during the second half of 2022, with a GMV of $1.6 billion. In comparison, Swiggy trailed behind with a GMV of $1.3 billion, representing a slightly smaller market share.
In addition, Swiggy has experienced a decline in its valuation as several investors, including Invesco and Baron Capital, have marked down its value to $5.5 billion and $6.5 billion respectively. These markdowns have resulted in Swiggy’s valuation falling below that of Zomato, which has recently witnessed a significant surge in value on the stock market.
Read More: Invesco maintains confidence in Swiggy, holds valuation steady at $5.5 Billion