As the restaurant industry roils amid the coronavirus, new confusion and questions have arisen regarding the practices of Providence-based restaurant management platform Upserve—specifically, its use of fees on online orders.
When Rhode Island Inno first spoke with the company in early May, for a profile on how it has pivoted in the age of Covid-19, spokeswoman Amber van Moessner said that Upserve did not charge commission fees on online orders.
"We take a transaction fee on credit card swipes," van Moessner said at the time. "That's the only cut we're taking here. A lot of third-party online ordering platforms charge commission fees. We don't do that."
It is true that Upserve does not charge fees to restaurants to use its online ordering platform, which makes it unusual among restaurant management software providers; services like Seamless, Uber Eats and Postmates charge roughly a 17 percent commission on top of a fee for delivering food to someone's door.
But at the beginning of May, Upserve did begin charging a new 5 percent fee and a 99-cent service fee on all online orders, as the Boston Globe reported in an article published on Wednesday and which van Moessner confirmed to Rhode Island Inno. van Moessner clarified that the new fees were ultimately charged to the end user, meaning that the person ordering the food, not the restaurant, was responsible for paying them.
A number of New England restaurateurs told the Globe that Upserve had added on the fees without informing them and without adequately explaining that the money generated through that fee would go to Upserve. And although the fees were paid by customers, restaurants shouldered a fresh influx of angry calls and had to address new issues when credit cards flagged the charges as fraudulent activity, the Globe reported.
van Moessner said the company notified its online ordering clients about the new charges in its Upserve Online Ordering (OLO) newsletter on April 30 and began rolling them out over the next 10 days. In direct response to customer complaints, Upserve scaled back the fee on May 27, taking it from 5 percent down to 2.99 percent, and removed the 99-cent service fee.
CEO Sheryl Hoskins announced the changes in an email to all Upserve clients, a copy of which Upserve provided to Rhode Island Inno.
"While we notified all our customers about this change through our weekly OLO newsletter email, it is clear to us now that we could have been more explicit in sharing this change and explaining the reasons behind it," Hoskins wrote.
In that email, Hoskins also explained the original rationale for the fee. The increased volume of online orders—from February to April, the startup saw a 169 percent increase in restaurants using its online ordering platform—correlated directly with increased technology and infrastructure costs, including "card not present" fees and text messaging fees, Hoskins said.
The new fee structure Upserve decided on was intended to be equitable to customers with different order volumes and ticket values, but restaurant owners told the company that the structure of the fee placed too high a burden on their guests, Hoskins said.
Upserve met with customers to get input and guidance on alternative pricing options before rolling out the new 2.99 percent fee, which will remain in place for the foreseeable future.
van Moessner declined to share specifics as to whether Upserve has lost business over the confusion.
"We've been working directly with our customers to make sure everyone is satisfied with the outcome of these updates," she said in an email. "We worked directly with each customer that was unhappy with the update."
