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Tokenization Market Worth $14.3 Billion by 2029
, July 29, 2022 ) According to a new market research report titled, ‘
by Offering (Solutions, Services), Application (Payment Security, User Authentication, Compliance Management), Vertical (BFSI, Retail, Travel, Healthcare, Others), Organization Size, and Geography - Global Forecast to 2029,’ the global tokenization market is expected to reach $14.3 billion by 2029, at a CAGR of 17.3% from 2022 to 2029.
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Tokenization refers to a process by which a piece of sensitive data, such as a credit card number, is replaced by a surrogate value known as a token. The sensitive data generally needs to be stored securely at one centralized location for subsequent reference and requires strong protective measures. The security of a tokenization approach depends on the security of the sensitive values and the algorithm and process used to create the surrogate value and map it back to the original value. Most businesses hold at least some sensitive data within their systems, whether it be credit card data, medical information, Social Security Numbers, or anything else that requires security and protection. Using tokenization, organizations can continue to use this data for business purposes without incurring the risk or compliance scope of storing sensitive data internally.
Increased adoption of digital payment approaches, the need to adhere to PCI DSS guidelines, and the rise in fraudulent activities in e-commerce are the major factors driving the growth of this market. In addition, the increasing use of payment apps across different industry verticals is expected to offer prominent growth opportunities for the growth of this market. However, the lack of trust in online banking is expected to restrain the growth of this market.
Impact of COVID-19 on the Global Tokenization Market
The outbreak of the COVID-19 pandemic resulted in increased usage of digital payment modes, leading to a significant increase in the growth of the tokenization market. A report issued by the ACI in April 2020 shows that real-time payments are expected to witness exponential growth due to the COVID-19 pandemic, with more than half a trillion transactions and a compound annual growth rate of almost 23% between 2019 and 2024.
Digital payment firms such as PhonePe, Paytm, and Amazon Pay have seen a nearly 50% spike in transactions through their digital wallets since the outbreak of the COVID-19 pandemic. The sudden increase in digital adoption has dramatically advanced the digital transformation agendas for numerous banks, with banking leaders recognizing online banking services as a critical means for increasing customer retention and growing revenue streams through personalized services. The impact of the pandemic has accelerated the adoption of a broad range of digital banking offerings and shifted consumers of all ages away from traditional banking branches and ATMs at an unprecedented pace.
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The COVID-19 pandemic accelerated consumer interest in adopting digital banking and payments interactions. For example, Americans set a record with 1.2 billion transactions on the instant payment network Zelle in 2020, a 62% increase from the previous year. Meanwhile, according to MasterCard’s Global State of Pay report released in October 2020, more than 53% of consumers who had access to a smartphone and a bank account stated that there had been an increase in the utilization of banking apps compared to the pre-COVID-19 pandemic scenario.
The increased usage of digital transactions resulted in an increase in cyber-attacks. In recent years, there has been a gradual increase in payment fraud activities at organizations, as nearly 75% of organizations were targets of a payment fraud attack in 2020 (Source: JP Morgan). Thus, increasing payment-related frauds are expected to propel the growth of the tokenization market in the coming years.
The tokenization market is segmented based on Offering (Solutions, Services), Application (Payment Security, User Authentication, Compliance Management), Vertical (BFSI, Retail, Travel, Healthcare, Others), Organization Size, and Geography. The study also evaluates industry competitors and analyses the market at the regional and country levels.
Based on offering, in 2022, the solutions segment is expected to account for the largest share of the tokenization market and is slated to register the highest CAGR during the forecast period. The rising demand for advanced payment security solutions for digital e-commerce and the increasing use of payment applications across different industry verticals is driving the growth of this segment. Furthermore, tokenization solutions have gained popularity as it enables organizations to adhere to the PCI DSS regulatory compliances. In addition, the growing number of data breaches and financial losses associated contribute to the growth of the tokenization solutions market.
Based on application, in 2022, the payment security segment is expected to account for the largest share of the tokenization market. The growth of this segment is driven by factors such as the increasing need to stay compliant with payment security guidelines and the growing need to ensure continuous customer experience and prevent fraudulent activities. Furthermore, growing consumers’ interest in contactless payments and the rising demand for cloud-based tokenization solutions and services are expected to provide lucrative opportunities for the growth of this segment. However, the user authentication segment is slated to register the highest CAGR during the forecast period. The growth of this segment is driven by factors such as rising incidents of security breaches and sophisticated cyberattacks leading to financial and reputational loss, stringent government regulations to increase the adoption of authentication solutions, and the rising instances of identity theft and fraud.
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Based on industry vertical, in 2022, the BFSI segment is expected to account for the largest share of the tokenization market. The growth of this segment is attributed to the rising implementation of regulatory security compliance, rising demand for cloud-based security solutions, and the increasing risk of cyber threats against BFSI infrastructure. However, the retail segment is slated to register the highest CAGR during the forecast period. The increase in smartphone usage, the rise of e-commerce channels, and the rising incidents of online payment fraud are expected to drive the growth of this segment.
Based on organization size, in 2022, the large enterprise segment is expected to account for the largest share of the tokenization market. This segment is also slated to register the highest CAGR during the forecast period. Increasing transactions of high valuations in large enterprises are compelling them to opt for tokenization solutions.
Based on geography, in 2022, North America is expected to account for the largest share of the tokenization market. The rising consumer shift towards online payment modes is driving the market growth in this region. North America’s strong financial position enables it to invest heavily in advanced solutions and technologies, which has provided the organizations in this region a competitive edge in the market.
The report also includes an extensive assessment of the key growth strategies adopted by the leading market participants between 2019 and 2022. The tokenization market is consolidated and dominated by a few major players, namely Bluefin Payment Systems LLC (U.S.), Braintree (U.S.), Cybersource (U.S.), Elavon (U.S.), Ingenico (France), Broadcom, Inc. (U.S.), Thales Group (France), Shift4 Payments, LLC (U.S.), Signifyd (U.S.), TNS, Inc. (U.S.), Tokenex (U.S.), SISA Information Security Pvt. Ltd. (India), Stripe (U.S.), Geobridge Corporation (U.S.), MasterCard (U.S.), Verifone Systems Inc. (U.S.), Fiserv, Inc. (U.S.), Micro Focus (U.K.) and American Express (U.S.).
To gain more insights into the market with a detailed table of content and figures, click here:
Scope of the report:
Tokenization Market, by Offering
Tokenization Market, by Application
Tokenization Market, by Industry Vertical
Travel & Hospitality
IT & Telecom
Media & Entertainment
Other Industry Verticals
Tokenization Market, by Organization Size
Small and Medium-sized Enterprises
Tokenization Market, by Geography
Rest of Europe
Rest of Asia-Pacific
Rest of Latin America
Middle East & Africa
Rest of MEA
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