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Tokenization Market Size, Share, Growth & Industry Analysis, By Component (Solution and Services), By Application (Payment Security, User Authentication, and Compliance Management), By Enterprise Type (Large Enterprises and Small & Medium Enterprises (SMEs)), By End-Users (BFSI, Retail and Consumer Goods, IT and Telecommunications, Healthcare, Energy and Utilities, and Others), and Regional Forecast, 2023 – 2030

Region : Global | Format: PDF | Report ID: FBI107201

 

KEY MARKET INSIGHTS

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The tokenization market size was valued at USD 2.39 billion in 2022 and is projected to grow from USD 2.81 billion in 2023 to USD 9.82 billion by 2030, exhibiting a CAGR of 19.6% during the forecast period. North America dominated the global market with a share of 37.24% in 2022.


Tokenization is a process whereby sensitive data are replaced by uniquely identifying symbols, which retain all the important information without compromising their security. Sensitive data, such as bank transactions, healthcare records, criminal history, driver’s license information, loan applications, stock purchases, voting registrations and so on, can be tokenized using this process.


The tokenization market growth can be witnessed due to a rising need to reduce data fraud. The growth is also expected to be stimulated by increasing usage of digitized processes and the digital handling of all sensitive data, thus increasing market share. It helps organizations in several ways such as reducing the fallout risks in a data breach, convenience to comply with PCI DSS regulations for merchants, and other authentication processes. According to Visa’s report in 2022, the reduction of fraud rate by 28% and a 3% increase in approvals resulted in sales increases for traders, while saving on the expenses related to fraud.


COVID-19 IMPACT


Rising Digitalization and Need to Enhance Consumer Experience during Pandemic to Fuel Market Growth


The COVID-19 pandemic brought positive change, such as the shift towards digitalization and cashless payment or online commerce which could be beneficial to this market over time. Since the pandemic, digital payment companies such as Phonepe, Paytm, and Amazon Pay have seen a sudden spike in transactions through their digital wallets.


With banking leaders recognizing the need to distribute financial support, fraud prevention, theft of sensitive data, and disruption of the value chain due to the closure of borders, the sudden increase in digital adoption has dramatically upgraded token services for many banks. To enhance the consumer experience and security of sensitive data, the impact of the COVID-19 pandemic has accelerated the adoption of these services and has shifted consumers of all ages to digital tokens.


LATEST TRENDS


Increasing Demand for the Secure Payment Gateways is a Key Trend


Organizations need to manage their security to protect sensitive data from financial and other kinds of fraud. Increasing adoption of payment gateways, and an increasing number of government regulations on the use of private information are some of the key trends which are witnessed in this market.


Due to the growing number of data breaches, the demand for a secure payment gateway is increasing, which is a major key trend in this market. According to Baymard Institute’s research in 2023, 18% of online carts were left unordered because users didn’t trust the site for payment gateway. Customers are switching to more secure payment gateway options due to the currency involved in the process, as a result of the increased adoption of payment gateways. Thus, the rising demand for secure payment gateway is increasing the use of tokenization solutions and services.


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TOKENIZATION MARKET GROWTH FACTORS


Rapid Proliferation of Digital Payment Methods to Aid Tokenization Industry Growth


The market is driven by the rapid proliferation of digital payment methods. There are several challenges, especially in terms of security, with the increased use of digital payments. End-users such as retail, healthcare, and banking & insurance use tokenization to replace confidential data in a unique code known as a token, for protection against security breaches due to the volume of digital payments. According to a survey conducted in the year 2021, more than 80% of Americans used digital payments and demanded easier, safer, and faster payments.


Businesses and consumers are seeking solutions to reduce risk exposure while improving compliance, given the increasing incidence of security breaches and threats associated with digital payments. Furthermore, due to fraud and inaccurate information, there is a growing drop in payment card use which leads to the loss of sales and poor customer experience. Therefore, tokenization as a solution overcomes these obstacles and is being adopted by businesses.


RESTRAINING FACTORS


Absence of Consistent Regulation and Technical Issues to Hamper the Market Growth


A key obstacle to the widespread application of this technology is the lack of regulatory clarity. The current draft standards for security token values are still being developed at an early stage, which is expected to evolve substantially over time. These challenges are creating difficulties for the widespread adoption of tokenization, in combination with the borderless nature of the blockchain.


Mostly where sensitive data is moved to the cloud environment, some organizations also encounter issues of technicality. As a result, issues related to system integration and regulation could hamper growth during the forecast period.


SEGMENTATION


By Component Analysis


Operational Flexibility and Visibility of Tokenization Components to Increase the Demand for Services


Based on the component, the market is segmented into solution and services. In terms of tokenization industry share, solution dominated the market in 2022. This growth is mainly driven by the increasing need to secure compliance with payment security guidelines, ensure constant customer experience, and maintain fraud prevention levels due to an increase in financial crime. In addition, lucrative growth opportunities are seen for the market through increasing consumer interest in digital payment.


The services are expected to grow at a higher CAGR during the forecast period. The growth of this segment can be attributed to the increasing need for visibility between organizations to diagnose and resolve problems before affecting the diagnosis of operations. These services are secure and can be enhanced and tailored. Several service providers and value added resellers have been helped by the increasing demand for services in this market, which has also encouraged them to increase their partnerships.


By Application Analysis


High Adoption of Advanced Payment Security Measures to Increase the Demand for Payment Security


Based on the application, the tokenization industry is segmented into payment security, user authentication, and compliance management. In terms of market share, payment security dominated the market in 2022. The growth is due to the increasing demand of advanced payment security solutions for online retail and across different sectors, and the growing need to protect online business transactions from advanced cyber-attacks. This solution is being adopted by banks and payment application developers, to help protect consumers' sensitive data due to the rapid growth of digital payments.


User authentication is expected to grow at a higher CAGR during the forecast period. The growth of this segment is due to enhanced payment security measures, and the need of preventing unauthorized users from accessing devices and networks. Also, an increase in cyberattacks on financial technology services providers, and a growing demand for protecting user payment transaction data is increasing the demand for this market.


By Enterprise Type Analysis


Increase in Need of Compliance Rules for SMEs to Aid Market Expansion


Based on enterprise type, the market is segmented into large enterprises and Small & Medium Enterprises (SMEs). Small & Medium Enterprises (SMEs) are expected to significantly grow at a higher CAGR during the forecast period, owing to the need for complying rules of tokens with risks related to data fraud. For small businesses, it offers a significant opportunity to simplify operations, increase the engagement of customers and strengthen their growth prospects. Furthermore, the cost and flexibility benefits made available to SMEs justify their preference for operating expense business models over capital expenditure.


As per market share, large enterprises dominated the market in 2022.  As a result of the rise in money laundering and other forms of fraud, processing of high risk transactions, as well as cost effectiveness measures to avoid manual operations, large enterprises are implementing tokenization systems.


By End-Users Analysis


Due to Need to Secure Highly Sensitive Data of Users to Grow Market Share in BFSI


Based on end-users, the tokenization industry is categorized into BFSI, retail and consumer goods, IT and telecommunications, healthcare, energy and utilities, and others. Among these, BFSI dominated the market in 2022. The BFSI industry invests largely to prevent any malicious data breaches and protect its data. In all their service offerings, the firms in this industry deal with highly sensitive data. The dependence and use of tokens and its techniques in this industry have increased, due to the growing number of digital financial services and digital payments.


Retail and consumer goods are expected to significantly grow at a higher CAGR during the forecast period. Due to its importance in data protection, this industry invests heavily in the market. A large number of transactions are carried out on an ongoing basis in online shopping. Retailers and consumer goods companies are using tokenization to make safe payments easier and more efficient while protecting users from sensitive payment data.


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REGIONAL INSIGHTS


Regionally, this market is fragmented into North America, South America, Europe, Middle East & Africa, and Asia Pacific.


North America Tokenization Market Size, 2019-2030 (USD Billion)

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North America holds the largest market share, contributing USD 0.89 billion in 2022. North America held a major part in the tokenization market share in 2022, due to the presence of large players in countries such as the U.S., Canada, and Mexico where new technologies have been adopted rapidly. Most Americans use some online payment mode for transactions. The regional market is driven by market trends in North America, such as buy now and pay later with cryptocurrencies. In addition, global payment networks for online transactions are largely provided by firms based in the U.S., such as Visa and Mastercard, providing a further boost to market growth. For instance,


According to Visa in 2022, more than 90% of North American payment volume is aided to support digital tokens.


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Asia Pacific is expected to significantly grow at a higher CAGR during the forecast period. The regional market is being driven by the growing penetration of smartphones, extensive internet usage and rapid adoption of advanced payment security technologies. Moreover, owing to the proliferation of real time payment platforms such as P2P money transfers and mobile payment platforms, the region is experiencing an increasing incidence of fraud.


Middle East & Africa is expected to register the second-highest CAGR during the forecast period. The rapid expansion of innovation and the digitization of data in this part of the region has led to a proliferation of tokenization technologies.


KEY INDUSTRY PLAYERS


Market Players Announce Merger & Acquisition, Partnerships, and Product Development Strategies to Promote Reach


Prominent players operating in the global market focus to provide flexibility and secure solution and services, by switching out to data security techniques. These companies focus on acquiring small and local firms to expand their business presence. Moreover, the merger & acquisitions, strategic partnerships, and leading investments in device technologies help increase the market growth.


List of Key Companies Profiled in Tokenization Market:



KEY INDUSTRY DEVELOPMENTS:



  • April 2023: Imperva, Inc., provider of cybersecurity services protecting critical applications, API's and data, partnered with Fortanix to become member of their strategic partner program. The emphasis of this partnership is on multicloud data protection. The ability to manage the entire data security process for customers ensuring data privacy and compliance is provided by Imperva and Fortanix's joint Component.

  • January 2023: Marqeta announced the introduction of a new web deployment product for its global modern card acquiring platform with tokenization capabilities. By providing provisioning for web push services, Marqeta customers can reduce friction at Point of Sale, without requiring users to download a mobile application and enabling them to pay directly from their mobile wallet.

  • January 2023: OpenText announced the acquisition of Micro Focus, a provider of critical software technology and services which assist customers in accelerating digital transformation. This acquisition expands OpenText's corporate mission to help business professionals protect their activities, gain greater insight into their information, and better manage the new generation of tools.

  • July 2022: TokenEx, a provider of payment optimization and cloud tokenization, announced its partnership with Visa to become a skilled Visa partner. TokenEx selected the Visa solution Token ID as part of its partnership with Visa, empowering banks, merchants, regional payment schemes, clearing houses, and other payment stakeholders such as TokenEx.

  • April 2022: BridgePay Network Solutions, LLC, a payment solutions and gateway provider, entered into a partnership with Visa to provide network tokenization to its users for all card types and brands to all payment processors.


REPORT COVERAGE


The tokenization market report provides a detailed analysis of the market and focuses on key aspects such as leading companies, product/service types, and leading end-users of the product. Besides, the report offers insights into the market trends and highlights key industry developments. In addition to the factors above, the report encompasses several factors that contributed to the growth of the market in recent years.


 

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Report Scope & Segmentation






























































ATTRIBUTE



DETAILS



Study Period



2019-2030



Base Year



2022



Estimated Year



2023



Forecast Period



2023-2030



Historical Period



2019-2021



Growth Rate



CAGR of 19.6% from 2023 to 2030



Unit



Value (USD Billion)



Segmentation



By Component, Application, Enterprise Type, End-Users, and Region



By Component




  • Solution

  • Services



By Application




  • Payment Security

  • User Authentication

  • Compliance Management



By Enterprise Type




  • Large Enterprises

  • Small & Medium Enterprises (SMEs)



By End-Users




  • BFSI

  • Retail and Consumer Goods

  • IT and Telecommunications

  • Healthcare

  • Energy and Utilities

  • Others (Real Estate, Government, etc.)



By Region




  • North America (By Component, Application, Enterprise Type, End-Users, and Country)

    • U.S. (By End-Users)

    • Canada (By End-Users)

    • Mexico (By End-Users)



  • South America (By Component, Application, Enterprise Type, End-Users, and Country)

    • Brazil (By End-Users)

    • Argentina (By End-Users)

    • Rest of South America



  • Europe (By Component; Application; Enterprise Type; End-Users, and Country)

    • U.K. (By End-Users)

    • Germany (By End-Users)

    • France (By End-Users)

    • Italy (By End-Users)

    • Spain (By End-Users)

    • Russia (By End-Users)

    • Benelux (By End-Users)

    • Nordics (By End-Users)

    • Rest of Europe



  • Middle East & Africa (By Component, Application, Enterprise Type, End-Users, and Country)

    • Turkey (By End-Users)

    • Israel (By End-Users)

    • GCC (By End-Users)

    • North Africa (By End-Users)

    • South Africa (By End-Users)

    • Rest of the Middle East & Africa



  • Asia Pacific (By Component, Application, Enterprise Type, End-Users, and Country)

    • China (By End-Users)

    • Japan (By End-Users)

    • India (By End-Users)

    • South Korea (By End-Users)

    • ASEAN (By End-Users)

    • Oceania (By End-Users)

    • Rest of Asia Pacific





Frequently Asked Questions

The market is projected to reach USD 9.82 billion by 2030.

In 2022, the market value stood at USD 2.39 billion.

BFSI is likely to lead the market.

Rapid proliferation of digital payment methods in tokenization to aid market growth.

Visa, Fiserv, Inc., Mastercard, Open Text Corporation, TrustCommerce, American Express, Thales, TokenEx, Inc, Entrust Corporation, and FIS are the top players in the global market.

North America is expected to hold the largest market share.

Asia Pacific is expected to exhibit the highest growth rate during the forecast period.

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