Paytm Launches Alternate ID-Based Guest Checkout Solution

Days after the Reserve Bank of India (RBI) proposed new card-on-file (CoF) tokenisation measures, fintech major Paytm on Monday (October 9) said it has launched the industry’s first alternate ID-based guest checkout solution for merchants. 

Tokenisation masks the 16-digit debit or credit card number with a unique token that is specific to one’s card to prevent misuse and theft from merchant websites. 

The offering, available to be embedded on merchants’ apps or websites, will allow end customers to checkout as a guest without saving sensitive card details for a transaction. The new launch is a product of its subsidiary Paytm Payments Services Limited (PPSL). It has integrated multiple card networks (such as Mastercard) to generate alternate ID for such transactions.

“The solution creates an alternate ID for customers, wherein he will enter his complete card details to process a transaction instead of entering account details and password for an occasional purchase,” Paytm said in a release.

This is expected to help eliminate data breaches as merchants will now not have to store sensitive personal data of customers for occasional purchases. 

In addition, Paytm’s new service will add an additional layer of security as until now a user’s card details were passed to subsequent entities in the transaction flow to authorise and process the transaction. 

As per the fintech juggernaut, the new offering will also make purchases faster and slash the process of signing up for an account on the merchant website by sharing additional information.

“As the first to go live with (an) Alternate ID solution, we continue to innovate and bring merchants the best of payment solutions… This eliminates core risks like misuse of sensitive card information and aligns with RBI’s guidelines to provide a secure transacting experience to our users. We continue to focus on compliance and safe payments for all,” a PPSL spokesperson said. 

Meanwhile, the company also told Inc42 that Paytm, through its payment gateway offering, is also working with the National Payments Corporation of India (NPCI) to roll out the guest checkout solution for all RuPay cardholders by October 25th.

The RBI’s CoF tokenisation feature requires users to save their card details on the merchant platform as a token. It is this token which is used to uniquely identify a card number. 

However, this security facility was previously not available for guest checkout-based transactions. The PPSL, with its new offering, now allows users to checkout as a guest with an alternate ID, which replaces actual card numbers. 

At the heart of the matter is the CoF tokenisation mandates proposed by the central bank that came into effect in October 2022. These tokens allow merchants and payment aggregators to store tokens of the card details and process payments on these tokens instead of card details.

Under the current rules, card tokenisation can only be undertaken on a merchant website or app while making payments. However, Reserve Bank of India (RBI) Governor Shaktikanta Das last week proposed the introduction of CoF token creation facilities directly at the issuer bank level. As such, users will now be able to create these tokens on the website of one’s bank or app instead of ecommerce websites or other merchants. 

As per the central bank, more than 56 Cr tokens have been created so far and transactions worth INR 5 Lakh Cr have been processed via these tokens.