Online food ordering and restaurant discovery platform Zomato is working on building its very own digital payments and mobile wallet solution as the company attempts to hook users into its ecosystem, following in the footsteps of its larger internet peers such as Ola, Flipkart and Amazon.
Discussions around Zomato building its own digital wallet began early this year when Ant Financial, a subsidiary of Chinese e-commerce giant Alibaba, invested in the food tech company, two sources in the know of the strategy told Business Standard.
Zomato is likely to roll out its digital payments solution in the next two months. To start with, the company is looking at launching this as a captive wallet service - for loading money and spending on ordering food and dine-in - over the Zomato app. Later on, as the adoption rises, it will be made operable for making payments to other services, sources said.
In March, Ant Financials invested $150 million in Zomato while also buying another $50 million worth shares from Info Edge which is the company’s largest shareholder. Alibaba is also the biggest backer of India’s largest digital payments service Paytm.
A Zomato spokesperson declined to comment for this story.
The Gurgaon-based company is aggressively working on building the product and is also hiring for payment and partnership roles. The effort is being led out of Mumbai, one of the persons mentioned above, said. The underlying strategy for the entry into the payments space is to boost customer retention and predictability of orders and spends.
“Zomato has done phenomenally well over the years, building one service at a time. They started out with food menus, then went on to table booking and later on to food delivery. Having a wallet is only a natural progression of the product,” said Sanchit Vir Gogia, the chief executive at consultancy firm, Greyhound Research. “It will not only help them earn more from their customers, but will enable a long-term relationship with them, not just for food but also for other services."
Zomato may give exclusive offers and cash-backs through its own wallet, integrated with its loyalty programmes like Zomato Gold and Zomato Piggybank. The company could also look at tapping its large base of partners to drive in-restaurant digital payments via its own app, extending benefits it offers for online orders to offline ones as well, sources added.
Currently, Zomato allows payments through popular wallets such as Paytm, Mobikwik and FreeCharge, beside debit and credit cards. It is not immediately clear what the scope of these partnerships will be once Zomato launches its own wallet.
“People using Ola Money on Ola than a Paytm on Ola typically have a higher frequency of transactions. That’s the common logic,” said a senior executive with an online payments firm who requested anonymity. “Also as wallets are uploaded, the money comes to the company upfront. They can also save the money that does towards the charges of using third-party wallets.”
With this move, Zomato will look to take on its biggest rival Swiggy, which already has built its own captive wallet Swiggy Money. Zomato, with 25-30 per cent market share, is trailing behind Swiggy which commands between 35-38 per cent of the Indian online food ordering market, according to a February estimates from research firm, RedSeer Consulting.