At 19.47% CAGR, Tokenization Market Size is Expected to Reach USD 6312.81 Million in 2027 Says Brandessence Market Research

LONDON, Nov. 10, 2021 /PRNewswire/ -- The tokenization market size is expected to grow at robust CAGR of 19.47% during the 2020-2027 periods to reach USD 6312.81 million in 2027. The tokenization market is reached USD 1824.73 million in 2020. Rising cases of credit card fraud, increased preference of customers towards contactless payments and rising use of digital payments are some of the major factors driving the growth of the global Tokenization market.


Increasing demand for data security, growing digitalization, amidst an insecure cyber environment remain key drivers of growth for tokenization. Earlier, tokenization was key to niche products like credit cards in most regions. Today, the large influx of data in the form of bank accounts, medical information, personal identity documents, financial documents like PAN, criminal records, service requests like loan application, among others increasingly favor tokenization systems. Tokenization remains ahead of its key competing systems like encryption, thanks to its ease-of-use, simplicity, and growing regulatory requirement. The increasing demand for advanced security solutions to protect valuable data online remains a prominent driver in the global tokenization market.

Global Tokenization Market: Competitive Analysis

The global tokenization market is a fragmented and innovative landscape, thanks to low barriers to entry, and growing expansion of the global landscape. The collaboration and acquisitions remain key strategies to expansion of market share, with key companies increasingly making moves in new regions to avail growth. Some key tokenization companies include Major players include Mastercard (US), Fiserv (US), Micro Focus (UK), Visa (US), HelpSystems (US), American Express (US), Thales TCT , MeaWallet , Futurex (US), CipherCloud (US), among others.

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Global Tokenization Market: An Overview

Tokenization is the process of replacing sensitive data with a reference point for carrying out a wide range of tasks. These systems have been predominant in credit card systems, wherein access to credit card information of consumers is restricted to employees, with a reference number, randomly generated. This is ideal for financial institutes like banks to prevent access to sensitive information like credit cards to potential hackers. In practice, original data or sensitive data like credit card information is stored on internal bank servers or at secure outstations and is verified through a mechanism of tokenization. Hence, validation systems, and authorization systems are key to growth of tokenization, globally. The lack of standardized external standard for validating tokenization, and authorities remain key restraints to growth of the global tokenization market.

According to the World Bank, globally, 41% adults made or received payments digitally in 2014. This increased to 52% in 2017, noting a promising growth of 11%. Similarly, in high income economies, 86% people received or sent money digitally in 2014. The percentage rose to a whopping 91% in 2017. In low-income economies, in 2014, just 32% people sent or received payment digitally in 2014. This percentage rose to a promising 44% in 2017.

In 2019, there were over 45 billion credit card transactions in the US. These transactions largely coming from key players like Visa, MasterCard, Discover, and American Express accounted for over $4 trillion in volume in total. Hence, with trends like digitalization, contactless payments, and increased expansion of key financial products like loans, debit cards, credit cards; the future of tokenization companies remains robust.

News: NPCI Launched NTS Platform for Tokenization of RuPay Cards

On October 20th, 2021; National Payments Corporation of India (NPCI) announced the launch of the NPCI Tokenization System (NTS) that will support tokenization of cards as an alternative to storing card details with merchants.

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Global Tokenization Market: Key Trends

In a new research survey, tokenization remains a key opportunity for new niches including increased consumer engagement, to opening up new revenue streams. However, the research notes loyalty remains a key factor in driving tokenization system advantages. For example, as people tend to be most 'loyal' in industries like financial services, banks and credit card companies remain ahead in tokenization – they key word here being loyalty.

Additionally, product awareness remains abysmally low globally, as just over 30% report familiarity with token systems in their daily lives. This includes lack of familiarity with highly confidential block chain-based token systems, which are ideal for specific commercial purposes like loyalty reward points. Due to growing awareness campaigns by tokenization companies, the use of blockchain-based tokenization is expected to grow as an easy form of payment in the near future. Furthermore, the awareness varies depending on the age of consumers, with Gen Z remaining most loyal, and aware about tokenization as a form of payment.

Today, the answer to 'which technology is predominantly used for contactless payment systems' increasingly favors tokenization technology, thanks to its growing acceptability around the world. Countries like China are floating the idea of its own virtual currency, signaling a more positive attitude towards adoption of tokenization systems. Furthermore, tokenization systems provide an added flexibility over classic encryption method. Classic encryption requires changes in size, and volume of data, which can be decoded using a specified technology in the background. On the other hand, tokenization leaves the original information intact as it in secure offline location, with only a reference used during tokenization.

According to a 2016 survey by Ponemon Institute, over 72% consumers reported willingness, and acceptance of encryption or tokenization for confidential data. Furthermore, 86% reported the technology will become even more important in the coming years. ACI worldwide reported that tokenization 34% retailers use tokenization technology in 2015, with a further 36% engaged in pilot launches for the projects. The increasing cyber-threats to small, and large businesses alike, and increasing digitalization are likely to drive tokenization, which makes potential cyber threats useless in securing key confidential data. The growing horizon of contactless payments, increased demand for IoT wearables in pharmaceutical industry, and growing use of tokenization in mobile devices project a promising forecast for tokenization companies during the 2020-2027 period.

Global Tokenization Market: Geographical Analysis

The global tokenization market report is divided into key regions including North America, Europe, Asia Pacific, Latin America, and Middle East & Africa. Among these, North America is expected to hold highest share of total revenues. The region is home to high penetration financial products including debit and credit cards, and is on an increased drive to encrypt data as threat from outside entity rises. Furthermore, key agencies in the region including FBI among others have issued strong warnings for businesses of all sizes to protect sensitive consumer data. The growing cyber security threats, and increased trends like machine learning, and data storage legislations like GDPR will also spell strong growth for the European region.

Global Tokenization Market Segmentation:

By Component:

  • Solution
  • Service

By Application:

  • Compliance Management
  • User Authentication
  • Payment Security

By Vertical:

  • Banking, Financial Services, and Insurance
  • Retail
  • Healthcare
  • Automotive
  • Others

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