Tokenization Market Size, Share & Trends Analysis Report By Component (Solution, Services), By Application Area, By Technology, By Deployment, By Industry Vertical, By Region, And Segment Forecasts, 2022 - 2030

Report Overview

The global tokenization market size was valued at USD 2.03 billion in 2021 and is expected to expand at a compound annual growth rate (CAGR) of 24.09% from 2022 to 2030. The industry growth can be attributed to the rising implementation of digitized processes and the digital handling of all sensitive data. The increase in simple and complex digital payments has boosted industry growth. Technological advancements have been able to provide the market with advanced data security solutions and services. The market is directly proportional to technological developments, where both grow together. During the onset of the COVID-19 pandemic, almost every industry was temporarily affected or shut down. After the initial worldwide lockdown, companies started digitizing their processes to ensure that no interruption could cause further delays or stoppages in processes. This digitization meant that companies would be involved in handling extremely sensitive consumer data regularly. This technology proved to be a great tool to ensure the security of sensitive data while companies rapidly digitized their services. The market grew during this unprecedented event as a direct result of demand and an influx of digital payments.

This technology solution is the most prominently used in the information technology, banking, financial services, and insurance industries. The technology has helped banks and payment applications accelerate their digital payment infrastructure and services around the world. For instance, in December 2021, PhonePe, a mobile payment application, introduced this solution in its service and began deleting all card on file details after a Reserve Bank of India regulation for the industry. This technology has created an in-depth and demanding market for itself solely on the basis of the benefits and data security it offers the industries. Regardless of the type of industry, every company handling sensitive data aims to apply this technology to their processes, thus fueling the overall industry growth.

Additionally, the banking, financial services, and insurance industry are at the forefront of the market. Due to the recent implementation and widespread standardization of digital services, the technology as a data security solution has also become standardized. As a result of technological development, the entry-level application and execution of this market have lowered and become more standardized globally. These industry’s services often include regular handling and exchange of sensitive data, which needs to be secured and protected from any leaks and malicious attacks. For instance, in February 2022, Radius Financial Group, a mortgage lender, fell victim to a data breach when malicious hackers illegally accessed the company’s server and stole the data of over 10,000 customers.

Furthermore, the industry is gaining popularity in developing nations like India and Brazil. As the developing countries are adopting digitization at an exorbitant rate, companies and solution providers are seeing this as an opportunity. Along with technological and data digitization advancements, governments and regulatory authorities in developing countries are introducing laws that push businesses toward this solution. This regulatory push is allowing the industry to thrive.

Component Insights

The solution component segment accounted for the largest revenue share of over 80.0% in 2021 and is likely to retain its dominance during the forecast period. As the market is helping industries to move toward full digitization, data security becomes the backbone. The solutions component segment is extremely vital for companies requiring quick solutions for data security. The segment also helps industries comply with the guidelines formed by regulatory bodies. With the help of the solution component, the industry can make large strides in data security for various industries.

However, the technology is a continuous process as new sensitive data is digitized regularly and rapidly. For this reason, the services component segment has become increasingly popular. The services component segment is projected to expand at a significant CAGR of 25.20% from 2022 to 2030. The technology as a services component is offered as a subscription model and companies often provide their own software, which includes some added technologies for extra data security. Modern technology service component also has to be compatible with multiple hardware and digital services for standardization.

Application Area Insights

The payment security segment accounted for the largest revenue share of over 30.0% in 2021 and is predicted to maintain its lead over the forecast period. The boom of digital payments has caused banks and payment application developers to introduce this solution to help protect the sensitive data of consumers. As QR-code payments have increased post-pandemic, tokenization helps users complete quick payments without worrying about their sensitive card data being leaked. This data security solution increases the efficiency of payment applications by having a strong security base.

The user authentication segment is expected to register a CAGR of 23.25% from 2022 to 2030. This was due to the increasing need to verify user credentials before proceeding with the process further. This technology helps with user authentication while protecting sensitive data from the start of the process till the end. As user data is an extremely valuable asset, it is deemed as sensitive data, which needs to be protected and cannot be shared without a user’s consent.

Technology Insights

The application programming interface-based segment accounted for the largest revenue share of over 55.0% in 2021 and is predicted to maintain its lead during the forecast period. The application programming interface-based technology runs the technology process in the background and offers data security. The market offers basic and advanced level technological data security for every digital process. The combination of this technology and encryption makes services accessible globally.

The gateway-based segment is expected to exhibit the fastest CAGR of 25.26% from 2022 to 2030. Gateway-based technology allows industries to conduct simple and complex payments or transactions at a local or even a global level. Gateway-based technology saves time and offers lightweight and background running data security software during transactions. The market is a huge investor in this technology as digital payments have become the norm following its strong ongoing trend.

Deployment Insights

The on-premises deployment segment held the largest revenue share of over 60.0% in 2021. The on-premises deployment segment is popular as the entire process is completed on the device and no data, including tokens, is sent anywhere from the device. This segment is popular in portable devices like mobile phones.

The cloud deployment segment is expected to register the highest CAGR of 26.58% during the forecast period. The tokenization process requires an active connection with the cloud to be executed, wherein, the token verification is often done in the cloud. The growth of the cloud deployment segment is due to the increase in cloud-based payments and processes handling sensitive data. Tokenization in this deployment segment requires an active internet connection to connect to the cloud.

Industry Vertical Insights

The banking, financial services, and insurance (BFSI) industry held the largest revenue share of over 20.0% in 2021. The companies in this industry handle extremely sensitive data in all of their service offerings. The BFSI industry invests heavily to protect this data and prevent any malicious data breaches. The influx of digital payments and digital financial services has increased the industry’s dependence and deployment of tokenization.

The retail and e-commerce industry segment is predicted to register a CAGR of 22.73% from 2022 to 2030. This industry is investing heavily in the market as data security is vital. In online shopping, a large volume of transactions is executed repeatedly. To make this easier and more efficient, retail and e-commerce players use tokenization to conduct safe payments while safeguarding users’ sensitive payment data. Tokenization has now also become a common norm for the retail and e-commerce industry.

Regional Insights

The North American region accounted for the largest revenue share of over 35.0% in 2021. The region witnessed the highest rate of adoption of digital technologies. Most Americans use some online payment mode for transactions. Furthermore, market trends in North America, such as buy now pay later for cryptocurrencies, drive the regional market. Moreover, players headquartered in the U.S., such as Visa and Mastercards, majorly provide payment networks for online transactions and thereby provide a further boost to the market growth.

The Middle East and Africa are expected to register the highest CAGR of 27.52% from 2022 to 2030. The Middle East invests huge amounts in technology and digitizing data. The Middle East region is geographically in the center of the world, which helps connect the international markets, hence the region is investing heavily in all global businesses, which include digital services which, in turn, use tokenization to protect sensitive data. The Middle East and African market are in the innovation phase, thus, their reliability on tokenization is exponentially high.

Latin America is expected to register the second-highest CAGR during the forecast period. Aggressive penetration of innovation and data digitization in Latin America has resulted in the normalization of the use of tokenization technology. Latin America offers significant growth opportunities as the modern technological and digital revolution has just begun in that region. The region also has foreign investment in data and technological industries, which leads to the growth of the industry.

Key Companies & Market Share Insights

The market has a number of top-level players, which often have some subsidiaries in the same industry. The majority of small-level players are low as the market has high entry barriers. As technology evolves, it increases the digitization and handling of sensitive data with data security solutions. The North American and European regions are dominated by large and medium-level companies.

The competition is very high, although the availability of substitutes is limited. Development in technology is allowing companies to ensure sensitive data security while increasing overall efficiency. The constant development of technology is leading to the market becoming more widespread and standardized even if it requires significant investment. As a result of globalization, the tokenization trend is present in many global markets over international boundaries. Seeing the growth potential and real-life use-cases, even governments and regulatory authorities are utilizing this technology in its services in dealing with handling sensitive data of citizens. Some prominent players in the global tokenization market:

• Visa, Inc.

• MasterCard, Inc.

• Fiserv, Inc.

• Micro Focus International plc

• American Express Company

• Thales Group

Tokenization Market Report Scope

Global Tokenization Market Segmentation

This report forecasts revenue growth at the global, regional, and country levels and analyzes the latest industry trends and opportunities in each of the sub-segments from 2018 to 2030. For this study, Grand View Research has segmented the global tokenization market report based on component, application area, technology, deployment, industry vertical, and region:

• Component Outlook (Revenue, USD Million, 2018 - 2030)

  • Solution

  • Services

• Application Area Outlook (Revenue, USD Million, 2018 - 2030)

  • Payment Security

  • User Authentication

  • Compliance Management

  • Others

• Technology Outlook (Revenue, USD Million, 2018 - 2030)

  • Application Programming Interface-based

  • Gateway-based

• Deployment Outlook (Revenue, USD Million, 2018 - 2030)

  • Cloud

  • On-premises

• Industry Vertical Outlook (Revenue, USD Million, 2018 - 2030)

  • BFSI

  • Healthcare

  • IT

  • Government

  • Retail And E-Commerce

  • Energy & Utilities

  • Other

• Regional Outlook (Revenue, USD Million, 2018 - 2030)

  • North America

    • U.S.

    • Canada

  • Europe

    • U.K.

    • Germany

    • Italy

    • Rest of Europe

  • Asia Pacific

    • China

    • Japan

    • India

    • Rest of Asia Pacific

  • Latin America

    • Brazil

    • Rest of Latin America

  • Middle East & Africa