Tokenization Market Revenue Outlook by Component (Solutions, Services), Organization Size (SMEs, Large Enterprises), Deployment Mode (Cloud, On-Premises), Application (Payment Security, User Authentication, Compliance Management), End Use (BFSI, Healthcare, IT & Telecom, Retail & E-Commerce, Education) - Global Industry Growth Forecast to 2030

Market Overview

The global tokenization market size was valued at $2,590.6 million in 2021, and it will advance at a CAGR of 19.3% during 2021–2030, to reach $12,684.2 million by 2030. The industry growth is primarily attributed to the rising financial frauds and the increasing need to secure payment gateways. Meeting security standards to prevent a data breach, while ensuring the customer experience is also expected to drive the growth of the market in the forecast period.

Strict PCI DSS Guidelines and GDPR Regulations

The Payment Card Industry Data Security Standard (PCI DDS) necessitates organizations, which accept, transfer, and store any cardholder’s data, to ensure that data is appropriately protected. This requires retailers to accept payment through the medium of credit cards and to abide by the regulations. Moreover, protected networks must be maintained and regularly updated on the database of the retailers. Also, merchants are required to report individual systems that store and process credit card information to ensure they are following PCI DSS requirements.

The General Data Protection Regulation (GDPR) covers organizations that store or transfer the personally identifiable information (PII) of European Union (EU) citizens, regardless of whether the person is an EU resident or not. The PII comprises credit card information as well as primary account numbers (PANs). The GDFR just like PCI DSS facilitates protection and enhances security networks to establish data security for organizations, retailers, and other users.

Compliance with these stringent regulations could be moderated with the use of tokenization, as it replaces the sensitive details with equivalent unique identification symbols or non-sensitive information while retaining the essential details without compromising security. This non-sensitive replacement of information is called a token. This token is further used as the exposed information and sent to payment processors while the original information is kept in the vault of the merchant payment gateway. Thus, the need for implementing tokenization solutions in the coming years is expected to grow significantly.

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BFSI Holds the Largest Share in the Market

The BFSI sector leads the tokenization market demand, globally. The category is expected to generate around $5.0 billion in 2030, owing to the rise in seamless digital payments, while ensuring secure transactions. The banks are pressurized to address the challenge of financial fraud while ensuring customer satisfaction. Tokenization addresses this challenge and its implementations help banks offer diverse payment offerings and enable their customers to make protected transactions, thus opening exponential value for the banks.

Further, safeguarding the transactions in any commerce environment is a major reason banks adopt tokenization solutions. With the upcoming newer payment solutions, modes, and real-time payment schemes encouraging the use of digital payments, tokenization is no longer limited to card payments. Moreover, multiple regulations and consumer protection schemes in place are further going to drive the demand for tokenization solutions for digital transactions.

Cloud Category To Witness Fastest Growth

The cloud category is expected to record the faster growth in the tokenization market outlook, advancing at a CAGR of around 20%, during 2021–2030. This mode of deployment is highly advantageous, as merchants are not required to build secure payment infrastructure containing privileged information like credit card detail, passwords, usernames, and other details. Cloud-based tokenization allows the exchange of sensitive information with unique identification symbols, which are irreversible placeholders known as a token, while securing sensitive information outside the internal system. This reduces the complexity of compliance and minimizes merchants’ risk to update and protect the customers’ sensitive information.

Cloud-based tokenization employs PCI-compliant tokenization solutions, which protect and manage cardholders’ details, enhancing security with tokenized payment card before it enters the payments gateway of a merchant. Thus, the solution eliminates the requirement of the on-premise expensive hardware and software and complies with PCI DSS guidelines. Additionally, the proliferation in demand for cloud technology is also due to its scalability, ease of use, easier integration, and cost-effectiveness. These features will certainly gain traction from the small & medium enterprises to adopt the cloud infrastructure, as compared to the traditional on-premise tokenization.

While on-premise tokenization is expected to have a modest share in the forecast period. The mode of deployment allows the storing of sensitive data in-house, giving organizations greater control over the database. Since the privileged information is stored in-house, the expensive software and hardware are to be purchased introducing high upfront and ongoing costs. Additionally, the overhead cost of maintenance, the complexity of compliance with PCI DSS, and the risk of a data breach make it a less viable option than cloud-based tokenization.

North America Holds the Largest Share in the Market

North America leads the tokenization market demand, globally. The regional market is expected to generate a revenue of over $6.0 billion in 2030, registering a CAGR of around 20% from 2021 to 2030. Some major factors fueling the market growth are rising cases of data breaches, payment security concerns, and increasing payment regulatory compliances in the region. As per a report, about 850,000 cybercrime cases were reported in 2021, with an increase of 7% from 2020 and a potential loss of about 7 billion dollars.

The growing number of data theft and cyber fraud cases has led to the increased adoption of tokenization by large enterprises and also SMEs to enhance security and combat future attacks.

Market Players Are Involved in Partnerships and Collaborations to Gain a Competitive Edge

The market is consolidated, with the presence of a few major players controlling a major share of the market. In recent years, they have been involved in partnerships and collaborations, to stay ahead of their competitors. For instance:

• In October 2021 American Express partnered with Goldman Sachs, to provide an integrated cloud-based digital payment solution for corporate clients. It offers support for multiple payment options, data, and analytics, in a single integrated platform.
• In June 2021, Micro Focus announced its partnership with Amazon Web Services. The collaboration involved the integration of Voltage SecureData with Amazon Macie. This integration would allow AWS customers to automate data-centric protection while complying with the protection regulations and data privacy.

Top Players in the Tokenization Market Are:

• Fiserv Inc.
• Visa Inc.
• Mastercard International Incorporated
• Micro Focus LLC
• American Express Company
• THALES
• Fidelity National Information Services Inc.

Market Size Breakdown by Segment

The study offers a comprehensive market segmentation analysis along with market estimation for the period 2017-2030.

Based on Component

• Solutions
• Services

Based on Organization Size

• Small & Medium Enterprises
• Large Enterprises

Based on Deployment Mode

• Cloud
• On-Premises

Based on Application

• Payment Security
• User Authentication
• Compliance Management

Based on End Use

• BFSI
• Healthcare
• IT & Telecom
• Retail & E-Commerce
• Education

Geographical Analysis

• North America
  • U.S.
  • Canada
• Europe
  • Germany
  • Italy
  • Spain
  • U.K.
  • France
• Asia-Pacific
  • Japan
  • India
  • China
  • Australia
  • South Korea
• Latin America
  • Brazil
  • Mexico
• Middle East and Africa
  • Saudi Arabia
  • South Africa