Swiggy, Zomato Platform Fee Hikes Spark Concerns

Bengaluru-based food delivery giants Swiggy and Zomato have recently increased their platform fees, raising concerns about pricing power and the justification for these rising costs. Swiggy increased its platform fees by approximately 17% to ₹17.58 (after taxes), shortly after Zomato raised its platform fee to ₹14.90 (before taxes) per order.

Since 2023, both companies have raised platform fees eight times, marking a more than 600% increase in under three years. What started as a nominal ₹2 charge has now grown into a double-digit levy.

Platform fees are attractive due to their economics. Unlike delivery charges, which are partially passed on to gig workers, or discounts that directly erode margins, platform fees are high-margin revenues with negligible incremental costs. In FY25, Zomato’s parent, Eternal, reported ₹327 Cr in platform fee revenue from its food delivery business, while Swiggy generated about ₹222 Cr during the same period. Swiggy alone clocked ₹132 Cr in platform fees in Q3 FY26.

The implicit justification for rising platform fees is that maintaining and operating these platforms is becoming more expensive, including technology infrastructure, cloud costs, algorithmic optimization, customer support systems, and rider incentives. However, at scale, technology platforms typically benefit from operating leverage, where the cost per transaction should ideally decline as order volumes increase. Rising automation due to AI adoption also helps reduce operational costs.

The synchronized fee hikes between Swiggy and Zomato raise concerns about a potential price cartel. Fee hikes occur in close succession, following similar trajectories, with little evidence of aggressive price competition. This duopoly-like behavior warrants regulatory attention, especially given the impact on millions of consumers daily.

Consumers are paying more for the same core service without visible enhancements in the experience to justify the incremental cost. The trajectory of platform fees suggests there is no natural ceiling, as demand has remained resilient despite repeated increases. Industry insiders believe that platform fees could soon touch ₹20 per order.

A credible third player offering significantly lower fees or regulatory intervention imposing checks on pricing practices could disrupt this trend.