Tokenization Market by Offering (Solutions and Services), Application (Payment Security, User Authentication, Compliance Management), Organization Size, End-use Industry (Retail, Healthcare, BFSI, Others), and Geography - Global Forecast to 2030

The Tokenization Market is expected to reach $13.23 billion by 2030, at a CAGR of 19.7% during the forecast period of 2023 to 2030. The growth of this market is attributed to the demand for secure payment, proliferation of digital payment methods, stringent PCI DSS regulations, and increasing financial fraud in e-commerce. In addition, the growing inclination toward using payment applications across various industries is expected to offer significant opportunities for the growth of this market. However, tokenization implementation adds a layer of complexity to the IT structure, which restrains the growth of this market. Furthermore, the low awareness of online payments in rural areas challenges the market’s growth. Additionally, the rising adoption of cloud-based tokenization solutions and services is a major market trend.

Impact of COVID-19 on the Tokenization Market

The COVID-19 pandemic severely impacted most countries around the globe. Governments imposed countrywide lockdowns to control the spread of the infection. The lockdown restrictions impacted manufacturing operations, with production facilities shutting down or running at reduced capacities to ensure social distancing and employee safety. Most industries came to a standstill due to raw material & workforce shortages, supply chain disruptions, and restrictions on international trade. The combat measures, such as complete lockdowns and quarantines to curb the outbreak, negatively impacted many markets globally, including the payments market.

The COVID-19 pandemic acted as a catalyst for positive change, such as the shift toward digitization and cashless payments or eCommerce, which may benefit this market in the long run. Digital payment firms such as PhonePe, Paytm, and Amazon Pay witnessed a nearly 50% spike in transactions through their digital wallets since the COVID-19 pandemic. The sudden increase in digital adoption dramatically advanced the tokenization agendas for numerous banks, with banking leaders recognizing the need to distribute financial aid, fraud prevention, theft of respiration protection masks, and interruption of the value chain due to closed borders. The impact of the COVID-19 pandemic accelerated the adoption of tokenization offerings and shifted consumers and merchants of all ages towards digital tokens for enhancing consumer experience and security in sensitive data.

Click here to: Get Free Sample Copy of this report

The Proliferation of Digital Payment Methods is Expected to Drive Market Growth

Digital payments were on the rise before COVID-19; however, the nationwide lockdowns catapulted a massive shift in consumer buying behavior and government policies & regulations and led to a rise in eCommerce. These factors have driven the adoption of digital payments across various industries and created the need for measures to protect online payments. According to McKinsey & Company (U.S.),  in October 2021, more than 82% of Americans used digital payments and demanded faster, easier, and safer payments. The rise of contactless payments poses several challenges, especially security. To safeguard against security breaches due to the volume of contactless payments, business institutions such as retail, restaurants, and banking & insurance rely on tokenization as a security measure to replace sensitive information within a unique code called a token.

As security breaches and threats have become more common in digital payments, businesses and consumers look for solutions to limit the exposure of risk and improve compliance obligations. Additionally, the decline in payment cards is increasing due to fraud and inaccurate or outdated information, resulting in loss of sales and poor customer experience. Thus, businesses are adopting network tokenization as one of the optimal payment solutions to overcome such barriers. Tokenization replaces the customer’s primary account numbers (PANs) and other card details with a token and directly communicates with the issuing bank to verify the card's legitimacy, preventing card declines. According to Visa (U.S.), in November 2022, payment transactions using network tokens can reduce fraud by nearly 26% and have an average authorization rate increase of 2.2%. Thus, the rising adoption of different payment modes has accelerated the demand for tokenization solutions as secure payment processing facilitates the transfer of online payments, client data, and other sensitive information and protects against fraud and other security issues.

Key Findings in the Tokenization Market Study:

In 2022, the Solutions Segment Dominated the Tokenization Market

Based on offering, the tokenization market is segmented into solutions and services. In 2022, the solutions segment accounted for the largest share of the tokenization market. The large market share of this segment is mainly attributed to the increasing need to ensure compliance with payment security guidelines and the growing need to ensure continuous customer experience and maintain fraud prevention levels due to increased financial crimes. Moreover, growing consumer interest in contactless payments and rising demand for cloud-based tokenization solutions are expected to provide lucrative opportunities for the market’s growth. However, the services segment is expected to register the highest CAGR during the forecast period. The growth of this segment is attributed to the growing need for visibility among organizations for diagnosing and troubleshooting problems before they impact operations or end-user experiences.

In 2022, the Payment Security Segment Dominated the Tokenization Market

Based on application, the global tokenization market is segmented into payment security, user authentication, and compliance management. In 2022, the payment security segment accounted for the largest share of this market. The large market share of this segment is attributed to the rise in demand for advanced payment security solutions for eCommerce, the increasing use of payment applications across different industries, and the rising need to secure online business-sensitive transactions from advanced cyberattacks. However, the user authentication segment is expected to register the highest CAGR during the forecast period due to enhanced payment security processes, the need to prevent unauthorized users from accessing a device or network, the rise in cyberattacks on fintech institutes, and the rising need to protect user payment transaction data.

Asia-Pacific to be the Fastest-growing Regional Market

Based on geography, the tokenization market is segmented into North America, Asia-Pacific, Europe, Latin America, and the Middle East & Africa. Asia-Pacific is projected to register the highest CAGR during the forecast period. The increasing penetration of smartphones, widespread internet usage, and rapid adoption of advanced payment security technologies drive the market’s growth in Asia-Pacific. In addition, the APAC region is struggling with rising fraud rates due to the proliferation of real-time payment platforms, including person-to-person (P2P) transfers and mobile payment platforms across Asia-Pacific. These factors are expected to increase the demand for enhanced security solutions, subsequently driving the growth of this market.

Key Companies

The report includes a competitive landscape based on an extensive assessment of the key growth strategies adopted by the leading market participants in the tokenization market between 2020 and 2022. The key companies profiled in this market report are 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.).

Scope of the report:

Tokenization Market, by Offering                     

• Solutions               
• Services
  • Integration Services
  • Support Services
  • Consulting Services

 Tokenization Market, by Application

• Payment Security
• User Authentication
• Compliance Management

Tokenization Market, by Organization Size

• Large Enterprises
• Small & Medium-sized Enterprises

Tokenization Market, by End-use Industry

• BFSI                       
• Retail                     
• Travel & Hospitality             
• Healthcare
• IT & Telecom
• Media & Entertainment
• Other End-use Industries     

Tokenization Market, by Geography

• North America
  • U.S.
  • Canada
• Europe
  • U.K.
  • Germany
  • France
  • Italy
  • Spain
  • Sweden
  • Denmark
  • Rest of Europe
• Asia-Pacific
  • Japan
  • China
  • India
  • Singapore
  • Malaysia
  • Indonesia
  • Rest of Asia-Pacific
• Latin America
  • Brazil
  • Mexico
  • Rest of Latin America
• Middle East & Africa
  • UAE
  • Israel
  • Rest of the Middle East & Africa

Key questions answered in the report: