Tokenization Market Research Report Information By Application Area (User Authentication and Payment Security), By Deployment Mode (On-Cloud and On-Premises), By Organization Size (SMEs and Large Enterprises), By End-User (Retail, Government, and BFSI & Commercial), And By Region (North America, Europe, Asia-Pacific, And Rest Of The World) – Market Forecast Till 2032.

Tokenization Market Overview

Tokenization Market is projected to grow from USD 6.8 Billion in 2024 to USD 23.4 billion by 2032, exhibiting a compound annual growth rate (CAGR) of 19.6% during the forecast period (2024 - 2032). Additionally, the market size for Tokenization was valued at USD 6.1 billion in 2023.

Some major factors driving the tokenization market growth are the increased adoption of online payment methods and the rise in security concerns associated with digitizing sensitive data.

Figure 1: Tokenization Market Size, 2024-2032 (USD Billion)

Source: Secondary Research, Primary Research, MRFR Database, and Analyst Review

Tokenization Market Trends

The growing proliferation of digital payment methods to drive market growth

Before COVID-19, digital payments were on the rise; however, the nationwide lockdowns precipitated a massive shift in consumer purchasing behavior and government policies and regulations, leading to an increase in eCommerce. These factors have accelerated the acceptance of digital payment transactions across multiple industries, necessitating the development of safeguards to secure online payments. According to McKinsey & Company (U.S.), more than 82% of Americans used digital payments in October 2021 and demanded faster, easier, and safer payments. The emergence of contactless payments presents numerous challenges, particularly regarding security. Businesses in retail, dining, banking, and insurance use tokenization as a protective measure to substitute sensitive information with a one-of-a-kind code called a token to prevent security breaches brought on by the prevalence of contactless payments.

Businesses and customers are looking for solutions to reduce risk exposure and strengthen compliance obligations as security breaches and threats have increased in frequency in digital payments. In addition, the use of payment cards is declining due to fraud and inaccurate or out-of-date information, negatively impacting customer satisfaction and lost sales. Network tokenization is thus being adopted by businesses as one of the best payment solutions to get around these obstacles.

Tokenization Market Segment Insights

Tokenization Application Area Insights

Based on the application area, the tokenization market segmentation includes user authentication and payment security. The payment security tokenization segment held the majority share in 2021, accounting for approximately 51-55% of the tokenization market revenue. This segment's large market share can be attributed to the increased demand for advanced payment security solutions for eCommerce, the increased use of payment applications across various industries, and the growing need to secure online business-sensitive transactions from highly advanced cyberattacks. The rise of digital payments has prompted banks and payment application developers to implement this solution to help protect consumers' sensitive data. As QR-code payments have increased since the pandemic, tokenization enables users to make quick payments without fear of their sensitive card data being compromised. This data security solution has a solid security foundation, improving payment applications' effectiveness.

Figure 2: Tokenization Market, by Application Area, 2021 & 2030 (USD Billion)

Source: Secondary Research, Primary Research, MRFR Database, and Analyst Review

Tokenization Deployment Mode Insights

Based on deployment, the tokenization market segment includes on-cloud and on-premises. On-Cloud dominated the market in 2021 and is expected to be the fastest-growing segment during the forecast period of 2022-2030. In the tokenization industry, cloud deployment is becoming more popular. SMEs consistently use cloud deployment solutions to help them focus more on their core competencies rather than investing capital in payment infrastructure. Using cloud-based solutions, companies can significantly reduce the costs associated with hardware, software, storage, and technical staff. The rise in cloud-based payments and processes managing sensitive data is driving the expansion of the cloud deployment segment. Tokenization requires an active internet connection in this deployment segment to connect to the cloud.

Tokenization Organization Size Insights

The tokenization market segmentation, based on the organization size, includes SMEs and large enterprises. The SMEs segment had the highest market revenue share in 2021. SMEs primarily use tokenization services and solutions to fulfill obligations and reduce fraud risks. One of the main objectives of attackers targeting SMEs is to use their applications to access client information, payment information, and other private information. Cybercriminals take advantage of SMEs' lax security by automating the attack of thousands of applications at once. SMEs increasingly turn to cloud-based tokenization solutions to save money, time, and resources. TaaS (Tokenization as a Service) helps SMEs overcome their financial limitations. As a result, more and more SMEs are adopting cloud-based tokenization programs, positively affecting the SME's tokenization market to expand.

Tokenization End-User Insights

Based on the end-user, the tokenization market segment includes retail, government, and BFSI & commercial. In 2021, the BFSI & commercial segment held the highest market revenue share. In their service offerings, companies in this industry handle extremely sensitive data. The BFSI industry makes significant investments to protect this data and prevent malicious data breaches. The proliferation of digital payments and financial services has increased the industry's reliance on and use of tokenization. Cybercriminals target this industry due to its high volume of financial transactions. As a result, the industry consistently seeks advanced payment security products and services to protect its employees, customers, assets, branches, operations, and offices; as a result, it controls most of the tokenization market by end users.

Tokenization Regional Insights

By Region, the study provides market insights into North America, Europe, Asia-Pacific, and the Rest of the World. The North American tokenization market is anticipated to expand at a significant CAGR during the study period, accounting for USD 2.09 billion in 2021. The CCPA and rising cyberattacks, particularly payment fraud across industries, are expected to increase regulation and boost demand for tokenization products and services in North America. The popularity of digital-first credit cards and contactless cards among consumers in North America is expected to support the development of tokenization. Rapidly expanding eCommerce, smartphone consumption for online payments, and access to various services such as online gaming, online streaming, and other government services are all driving market growth in North America.

Moreover, the major countries covered in the market report include the United States, Germany, Canada, France, the United Kingdom, Italy, Spain, India, Japan, Australia, China, South Korea, and Brazil.

Figure 3: TOKENIZATION MARKET SHARE BY REGION 2021 (%)

Source: Secondary Research, Primary Research, MRFR Database, and Analyst Review

The European tokenization market is the world's second-largest owing to the huge amounts of technology and digitizing data. Europe is geographically located in the center of the world, which helps connect international markets; as a result, the region is heavily investing in all businesses, including digital services, which use tokenization to protect sensitive data. The European markets are in the innovation stage, making them exponentially more reliable for tokenization. Further, the German tokenization market held the largest market share, and the France tokenization market was the fastest-growing market in the European region.

The Asia Pacific tokenization market is expected to grow at the fastest rate of CAGR during the forecast period. Government initiatives to prevent financial fraud and nation-specific compliance laws intended to improve cybersecurity are predicted to fuel demand for efficient tokenization solutions in the region. Other factors influencing the adoption of tokenization solutions include the rise in smartphone use for online shopping and transactions and the quick uptake of online transactions, which has led to an influx of new cyber threats. 

As a result, there are now more customers, making tokenization technologies necessary to safeguard and strengthen payment procedures. Consumers in the region use various payment methods for online transactions within and outside their home countries. As a result, Asia Pacific businesses face increased demand for secure payment methods. Moreover, China’s tokenization market held the largest market share, and the Indian tokenization market was the fastest-growing market in the Asia-Pacific region.

Tokenization Key Market Players & Competitive Insights

There are several top-tier players in the market, many of which have subsidiaries in the same industry. The digital revolution and processing of sensitive data with data security solutions increase as technology advances. Large and medium-sized businesses predominate in North America and Europe. The competition is fierce, despite the limited availability of substitutes. Technology advancement enables businesses to guarantee the security of sensitive data while boosting overall productivity.

The constant advancement of technology leads to a more widespread and standardized market, even if it necessitates significant investment. The tokenization trend has spread across many markets due to globalization. Companies are focusing on using tokenization to enable merchant system interaction with customer wearables.

The Lookout security platform safeguards your data in the cloud while protecting your devices from malware and other threats. Lookout, a US-based application server security firm, acquired CipherCloud for an undisclosed sum in March 2021. This integrated approach will assist Lookout in closing gaps when businesses use multiple products from various security vendors. CipherCloud is a software company based in the United States specializing in cloud application discovery and risk assessment, data security, tokenization, data loss prevention, searchable encryption, key management, and malware detection.

Futurex LP, also known as Futurex, is a privately held information technology company based in Texas specializing in cryptography. For businesses like banks, retailers, and terminal makers, Futurex offers data encryption solutions. Futurex introduced the new version of its VirtuCrypt financial cloud hardware security module (HSM) service in June 2020. These services met the critical payment system cryptography and prime management needs of financial services companies in the cloud.

Key Companies in the tokenization market include

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  Symantec Corporation (US)

  
  


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  Gemalto NV (Netherlands)

  
  


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  Fiserv Inc (US)

  
  


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  Paymetric Inc (US)

  
  


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  First Data Corporation (US)

  
  


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  CipherCloud (US)

  
  


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  Futurex (US)

  
  


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  CardConnect Corp. (US)

  
  


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  3Delta Systems Inc (US)

  
  


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  Thales e-Security Inc (US)

  
  

Tokenization Industry Developments

October 2022 - American Express partnered with Goldman Sachs to provide large corporate clients with cloud-based payment solutions. American Express would use Goldman Sachs' Transaction Banking (TxB) system platform to provide multiple payment options, making large companies' B2B payments easier and more efficient.

September 2020 - CipherTrace, a renowned cryptocurrency intelligence firm, was purchased by Mastercard. Combining Mastercard's cybersecurity solutions and CipherTrace's digital assets would provide greater transparency to businesses, assisting them in identifying risks.

Tokenization Market Segmentation

Tokenization Application Area Outlook

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  User Authentication

  
  


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  Payment Security

  
  

Tokenization Deployment Mode Outlook

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  On-Cloud

  
  


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  On-Premises

  
  

Tokenization Organization Size Outlook

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  SMEs

  
  


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  Large Enterprise

  
  

Tokenization End-User Outlook

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  Retail

  
  


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  Government

  
  


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  BFSI & Commercial

  
  

Tokenization Regional Outlook