Global Tokenization Market Size, Share, Trends, COVID-19 Impact & Growth Forecast Report – Segmented by Component, Application, Technique, Deployment, Enterprise Size, End-User, and Region (North America, Europe, Asia Pacific, Latin America, and Middle East & Africa) - Industry Analysis (2024 to 2029)

Published: January, 2024
ID: 8992
Pages: 155

Global Tokenization Market Size (2024 to 2029)

The global tokenization market is estimated to reach USD 5.02 billion in 2024 and USD 13.29 billion by 2029, growing at a CAGR of 21.5% during the forecast period.

The growing requirement to comply with regulations, the growing demand to create a consistent user experience, and the increasing demand to maintain fraud prevention levels due to increased financial crimes are driving the tokenization market. Furthermore, rising demand for cloud-based tokenization solutions and services and increased customer alignment towards contactless payments will present attractive prospects for tokenization suppliers.

Tokenization is the process of converting sensitive data into non-sensitive "tokens" that can be used in a database or internal system without being visible to the general public. Tokenization protects sensitive data by replacing it with an irrelevant value of the same length and format as the original. Subsequently, the tokens are delivered to an organization's internal systems to be used, while the original data is kept in a token vault. Tokenized data, unlike encrypted data, is impregnable and irrevocable.

Tokenization is the process of removing sensitive information from your system and replacing it with tokens. Most businesses have sensitive data on their systems, whether credit card information, medical information, Social Security numbers, or anything else that requires security and protection. Tokenization replaces the data in the environment with one-of-a-kind tokens for each piece of data.

Global Tokenization Market Drivers:

The increased requirement to safeguard sensitive data and information against compromise is the primary driver of the tokenization market's growth. The tokenization technology has been widely employed to protect sensitive data against fraud. Tokenization offers a variety of benefits, including protection from hackers and thieves, a reduced PCI scope, internet protection, and internal security. Significant factors, such as an increase in data breaches and cyber-attacks around the world, are projected to propel the industry forward.

Contactless payment systems have grown in popularity worldwide due to their convenience, which allows users to make payments without the need for help and eliminates the need to be physically present. Mobile is the most popular contactless payment option among customers. One key driver of the adoption of contactless payment solutions is cost reduction.

Global Tokenization Market Restraints:

Although tokenization is not a new payment security technology, many end-users still utilize an older payment security method that is more vulnerable than tokenization. For organizations, a lack of knowledge about sophisticated and cutting-edge payment methods is a concern. Unlike encryption, tokenization uses 'tokens' to substitute critical information rather than transferring it from credit/debit cards. Budget constraints also make it difficult for SMEs to replace outdated technology and combat payment fraud with standard security solutions.

Impact of COVID-19 on the global tokenization market:

The spread of COVID-19 has limited the use of currency notes. This constraint transformed the way people use online payments. Gemalto reports that 90% of European business leaders invested in contactless payment solutions. According to a Visa survey, 82% of Taiwanese consumers have used contactless payments. MasterCard had 61% of in-store contactless transactions in the Czech Republic, 41% in Poland, 27% in Hungary, and 27% in Slovakia. According to the Association for Financial Professionals, 66% of Australian cardholders have contactless cards that allow them to tap and pay. These statistics show that customers are increasingly inclined to use contactless payments, and COVID-19 has significantly increased the use of contactless payments.

GLOBAL TOKENIZATION MARKET REPORT COVERAGE:

REPORT METRIC

DETAILS

Market Size Available

2023 to 2029

Base Year

2023

Forecast Period

2024 to 2029

CAGR

21.5%

Segments Covered

By Component, Application, Technique, Deployment, Enterprise Size, End User, and Region.

 

Various Analyses Covered

Global, Regional & Country Level Analysis, Segment-Level Analysis, DROC, PESTLE Analysis, Porter’s Five Forces Analysis, Competitive Landscape, Analyst Overview on Investment Opportunities

Regions Covered

North America, Europe, APAC, Latin America, Middle East & Africa

 

Market Leaders Profiled

Finserv (US), Visa (US), American Express (US), CipherCloud (US), Tokenex (US), Futurex (US), Symantec (US), Liaison Technologies (US), Thales e-Security (France), PayU (Netherlands), AsiaPay (China) and Others.

 

This research report on the global tokenization market has been segmented and sub-segmented based on the component, application, technique, deployment, enterprise size, end user, and region.

Global Tokenization Market – By Component:

  • Solutions

  • Services

The solution category is predicted to gain the largest market share over the forecast years. Many SMEs are turning to tokenization to defend themselves from rising payment fraud and identity theft.

Global Tokenization Market – By Application:

  • Supermarkets/Hypermarkets

  • Convenience Stores

  • Pharmacies

  • Online

  • Others

As online purchasing gets more popular, eCommerce companies are devoting more attention to payment security. Even in the event of a data breach, tokenization makes it more difficult to reveal sensitive personal data. While tokenization will not eliminate data breaches, it will assist in reducing the financial damages that may occur. As a result, tokenization simplifies the user experience while maintaining high levels of fraud prevention.

Global Tokenization Market – By Technique:

  • API-Based

  • Gateway-Based

The API-based market led the Global Tokenization Market by Tokenization Technique in 2020, with a predicted CAGR of 19.3 percent during the forecast period. Over the projection period, the Gateway-Based market would grow at a CAGR of 21.7 percent.

Global Tokenization Market – By Deployment:

  • On-Premise

  • Cloud

Cloud deployment is developing rapidly in the tokenization industry. SMEs increasingly turn to cloud deployment options because they allow them to focus on their core skills rather than on payment infrastructure. Using cloud-based solutions, businesses can dramatically reduce their software, hardware, storage, and technical staffing costs.

Global Tokenization Market – By Enterprise Size:

  • Large Enterprises

  • Small & Medium Enterprises

Tokenization products and services are mostly used by SMEs to comply with responsibilities and mitigate fraud risks. These SMEs use tokenization solutions to secure sensitive data from network weaknesses and assaults. One of the main goals of attackers targeting SMEs is to gain access to client information, payment details, and other confidential information through their applications. Cybercriminals use automation to attack thousands of applications at once, taking advantage of SMEs' lack of security. To save money, time, and resources, SMEs are increasingly turning to cloud-based tokenization solutions. Tokenization as a Service (TaaS) addresses the financial constraints encountered by SMEs, with the segment increasingly implementing cloud-based tokenization solutions, driving the tokenization market for SMEs to grow.

Global Tokenization Market – By End-User:

  • BFSI

  • Retail & eCommerce

  • Government

  • Healthcare

  • Telecom & IT

  • Energy & Utilities

  • Others

Cybercriminals target the BFSI sector because it deals with money. It displays a large number of financial transactions, which is enticing to thieves. As a result, it is always on the search for advanced payment security solutions and services to protect its employees, customers, assets, offices, branches, and operations; as a result, it owns a significant percentage of the tokenization market by vertical. In the BFSI sector, tokenization solutions are popular and have a high acceptance rate since they help firms manage PCI DSS regulatory compliance. Furthermore, the vertical frequently develops new and enhanced financial goods and services to boost business operations, which attracts fraudsters looking for sensitive client data. The BFSI vertical would have to prioritize payment security with services like smart banking, online banking, and mobile banking.

Global Tokenization Market – By Region:

  • North America

  • Latin America

  • Europe

  • Asia Pacific

  • Middle East & Africa

The North American tokenization market was worth USD 591.6 million in 2022 and is estimated to rise to USD 2751.3 million by 2028, with a CAGR of 24.6 percent. Regulations like the CCPA, as well as an increase in cyberattacks, particularly payment thefts across industries, are projected to fuel demand for tokenization solutions and services in North America. Customer inclinations for contactless cards and digital-first credit cards are projected to aid the growth of tokenization in North America. Growing eCommerce, smartphone usage for online payments, and access to various services, including online streaming, online gaming, and other government services, are all driving market expansion in North America.

The demand for effective tokenization solutions in APAC is expected to be fueled by government efforts to combat financial fraud and country-specific compliance laws aimed at boosting cybersecurity. Other factors driving tokenization solution adoption include the increased use of smartphones for online transactions and online shopping and the rapid adoption of online transactions, which has opened the door to a flood of new cyber threats. As a result, the number of customers has increased, necessitating tokenization technologies to protect and reinforce payment processes.

The Asia Pacific Tokenization Market is predicted to develop at a CAGR of 22.3 percent over the forecast period. China dominated the Asia Pacific Cloud Tokenization Market, growing at a CAGR of 21.4 percent over the forecast period.

The Japanese market is rising at a rate of 23% during this time. Furthermore, during the forecast period, the Indian market is expected to grow at a CAGR of 24.5 percent. Large Enterprises dominated the Malaysia Tokenization Market by Enterprise Size, with a market value of USD 59.3 million by 2026. Small and Medium Businesses (SMBs) are growing at a rate of 27.4 percent per year.

During the forecast period, the European Tokenization Market is expected to develop at a CAGR of 19.5 percent. During the projected period, the German market will continue to dominate the area, rising at a CAGR of 16.7%. The UK market is growing at a rate of 17.1% per year. Furthermore, the French market is expected to grow at an annual rate of 18.9%. By 2026, the API-Based market had dominated the Spanish market, with a market value of $57.6 million.

The African region accounts for only 2% of the global tokenization market. Central banks in the MEA region are discovering digital currency opportunities, which could boost the tokenization market. The UAE is the leading country, with $27 billion and $61 billion invested in credit agencies and private firms, respectively. Egypt is the most promising market in North Africa, with a $6 billion fund dedicated to SMEs and consumer liquidity.

KEY MARKET PARTICIPANTS:

The major companies operating in the global tokenization market include Finserv (US), Visa (US), American Express (US), CipherCloud (US), Tokenex (US), Futurex (US), Symantec (US), Liaison Technologies (US), Thales e-Security (France), PayU (Netherlands), AsiaPay (China), and others.

RECENT DEVELOPMENTS:

  • Mastercard has partnered with Lawrencedale Agro Processing India (LEAF), an agribusiness value chain facilitator, to improve financial inclusion and increase the incomes of over 1 million farmers in India. The LEAF Farmer Network was created as a result of the collaboration of the two collaborate (LFN).

  • On October 28, PayU, an online payments solutions provider, announced the launch of 'PayU Token Hub,' a tokenization solution for businesses that would allow their customers to use saved cards with added security and following RBI standards.

  • Segmint, a global leader in transaction purification and analytics for financial institutions, has announced a partnership with TokenEx, a data security business based in Oklahoma that protects sensitive data to enable crucial digital processes. Segmint has enlisted TokenEx's Payment Tokenization Services, allowing the fintech to lay the groundwork for multi-channel marketing message delivery. The financial services industry is no longer faced with the problem of sharing sensitive data across several platforms.

  • In India, Visa, a digital payments firm, has offered card-on-file (CoF) tokenization services in compliance with Reserve Bank of India (RBI) regulations. The CoF tokenization solution will be available from e-commerce companies, including Grofers, Bigbasket, and MakeMyTrip, and will be launched in collaboration with Juspay, a mobile-based payment company.

 

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Frequently Asked Questions

What are the primary drivers fueling the growth of the tokenization market worldwide?

The growth of the tokenization market is primarily driven by increasing concerns regarding data security, stringent regulatory requirements, the rising adoption of digital payment methods, and the growing prominence of blockchain technology across various industries globally.

What are the key industries leveraging tokenization solutions on a global scale?

Industries such as banking and finance, healthcare, e-commerce, retail, and telecommunications are among the key sectors leveraging tokenization solutions globally to enhance security, streamline transactions, and protect sensitive data across various digital platforms.

How do tokenization solutions impact customer experience and trust in global markets?

Tokenization solutions enhance customer experience by offering secure and convenient payment options, reducing the risk of fraud and identity theft. By safeguarding sensitive data and ensuring privacy, tokenization builds trust among consumers, leading to increased confidence in digital transactions and interactions on a global scale.

What are the future prospects and trends expected to shape the tokenization market globally?

Future prospects for the tokenization market include the integration of tokenization with emerging technologies such as artificial intelligence and the Internet of Things, the expansion of tokenized asset classes beyond traditional financial instruments, and the continued evolution of regulatory frameworks to accommodate tokenized assets and transactions on a global scale.

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