Tokenization Market Size 2021-2031 | Drivers and Opportunities
The tokenization market size is projected to reach US$ 11.18 billion by 2031 from US$ 2.87 billion in 2023. The market is expected to register a CAGR of 18.5% in 2023–2031. Rising digitalization, availability of a variety of online payment methods, and an increasing number of online transactions are likely to remain a key tokenization market trend.
Tokenization Market Analysis
The tokenization market is growing at a rapid pace due to the increasing data breach activities and growing data security concerns among consumers across the globe. The market is expanding steadily, driven by the consumer demand for contactless payment. Moreover, the growing demand for cloud-based tokenization and government initiatives for cashless transactions are providing lucrative opportunities for tokenization market growth.
Tokenization Market Overview
Tokenization is the process of exchanging or converting sensitive data for nonsensitive data into smaller parts called “tokens.” It can be used in a database or internal system without bringing it into scope. Tokens have almost no intrinsic value; they are only helpful when they represent something important, such as a credit card primary account number (PAN) or Social Security number (SSN). Most organizations store sensitive data in their systems, whether it's credit card information, medical information, social security numbers, or anything else that has to be secure and protected. Tokenization allows enterprises to continue using this data for commercial purposes without the risk or compliance implications of retaining sensitive data internally.
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Tokenization Market: Strategic Insights
Market Size Value in US$ 1378.8 Million in 2020 Market Size Value by US$ 6823.7 Million by 2027 Growth rate CAGR of 25.7% from 2020-2027 Forecast Period 2020-2027 Base Year 2020
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Tokenization Market: Strategic Insights
| Market Size Value in | US$ 1378.8 Million in 2020 |
| Market Size Value by | US$ 6823.7 Million by 2027 |
| Growth rate | CAGR of 25.7% from 2020-2027 |
| Forecast Period | 2020-2027 |
| Base Year | 2020 |
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Tokenization Market Drivers and Opportunities
Increasing Data Breach Activities is Driving the Market
Criminals target businesses that accept debit cards and credit credits. The payment made from these cards contains valuable information that can be stolen. This increases the adoption of tokenization among businesses to protect valuable information. Tokenization helps businesses to protect themselves from any negative financial consequences of data theft. Tokenization not only protects financial information but also supports businesses to protect their personal data from breaches. Moreover, the growing adoption of credit card tokenization among businesses to improve data security for online businesses is driving the market. Tokenization provides data security from the time data is being captured to storage by eliminating the actual storing of credit card numbers in POS machines and internal systems.
Growing Demand for Cloud-based Tokenization – An Opportunity in the Tokenization Market
Cloud-based tokenization is the process of exchanging sensitive data for an irreversible, non-sensitive placeholder known as a token while securely maintaining the original, sensitive data outside of the business's internal systems. Cloud-based tokenization is easier to implement and less expensive than traditional on-premise tokenization. This helps businesses in lowering risk and compliance exposure by removing sensitive data from their data environments. Businesses can also safeguard that data while maintaining utility and the agility of their current business processes by utilizing format- and length-preserving tokens as a placeholder for the original, sensitive data. This is significantly creating opportunities in the market during the forecast period.
Tokenization Market Report Segmentation Analysis
Key segments that contributed to the derivation of the tokenization market analysis are component, deployment, enterprise size, and industry vertical.
- Based on component, the tokenization market is divided into solution and services. The solution segment held a larger market share in 2023.
- In terms of deployment, the market is categorized as cloud and on-premise. The cloud segment held a larger market share in 2023.
- On the basis of enterprise size, the tokenization market is divided into SMEs and large enterprises. The SMEs segment held a larger market share in 2023.
- In terms of industry vertical, the tokenization market is segmented into BFSI, Retail, IT & telecom, healthcare, government, and others. The BFSI segment held a larger market share in 2023.
Tokenization Market Share Analysis by Geography
The geographic scope of the tokenization market report is mainly divided into five regions: North America, Asia Pacific, Europe, Middle East & Africa, and South America/South & Central America.
In terms of revenue, North America accounted for the largest tokenization market share, due to the rapid adoption of new innovative technologies and increasing demand for cloud-based solutions among businesses. Increasing use of online payment methods and growing buy now, pay later with cryptocurrencies is fueling the market. Many financial firms in the US, such as Visa and Mastercard, are providing online transaction services and payment solutions to customers across the globe. This increases the demand for tokenization for protecting data. For instance, in August 2022, Visa issued over 4 billion network tokens globally through Visa Token Service (VTS) to support digital tokens.
Tokenization Market Report Scope
Tokenization Market News and Recent Developments
The tokenization market is evaluated by gathering qualitative and quantitative data post primary and secondary research, which includes important corporate publications, association data, and databases. The following is a list of developments in the market for tokenization and strategies:
- January 2024: The BIS Innovation Hub announces the first six projects for the 2024 work program, including upcoming projects focusing on safety and security, green finance, and next-generation financial infrastructures, and additional work on advanced data analytics and tokenization is also planned. (Source: BIS, Press Release, 2024)
Tokenization Market Report Coverage and Deliverables
The “Tokenization Market Size and Forecast (2021–2031)” report provides a detailed analysis of the market covering below areas:
- Market size and forecast at global, regional, and country levels for all the key market segments covered under the scope
- Market dynamics such as drivers, restraints, and key opportunities
- Key future trends
- Detailed PEST/Porter’s Five Forces and SWOT analysis
- Global and regional market analysis covering key market trends, major players, regulations, and recent market developments
- Industry landscape and competition analysis covering market concentration, heat map analysis, prominent players, and recent developments
- Detailed company profiles
Report Coverage
Revenue forecast, Company Analysis, Industry landscape, Growth factors, and Trends
Segment Covered
Component , Deployment , Enterprise Size , Industry Vertical , and Geography
Regional Scope
North America, Europe, Asia Pacific, Middle East & Africa, South & Central America
Country Scope
Argentina, Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, Mexico, Russian Federation, Saudi Arabia, South Africa, South Korea, United Arab Emirates, United Kingdom, United States
Frequently Asked Questions
The incremental growth expected to be recorded for the global tokenization market during the forecast period is US$ 8.31 billion.
The global tokenization market is expected to reach US$ 11.18 billion by 2031.
The key players holding majority shares in the global tokenization market are Broadcom, Inc, FUTUREX, Fiserv, Inc., Micro Focus International plc, and OpenText Corporation.
The Rising digitalization, availability of a variety of online payment methods, and increasing number of online transactions are anticipated to play a significant role in the global tokenization market in the coming years.
The increasing data breach activities and growing data security concerns among consumers across the globe are the major factors that propel the global tokenization market.
The global tokenization market was estimated to be US$ 2.87 billion in 2023 and is expected to grow at a CAGR of 18.5% during the forecast period 2023 - 2031.
The Insight Partners performs research in 4 major stages: Data Collection & Secondary Research, Primary Research, Data Analysis and Data Triangulation & Final Review.
- Data Collection and Secondary Research:
As a market research and consulting firm operating from a decade, we have published many reports and advised several clients across the globe. First step for any study will start with an assessment of currently available data and insights from existing reports. Further, historical and current market information is collected from Investor Presentations, Annual Reports, SEC Filings, etc., and other information related to company’s performance and market positioning are gathered from Paid Databases (Factiva, Hoovers, and Reuters) and various other publications available in public domain.
Several associations trade associates, technical forums, institutes, societies and organizations are accessed to gain technical as well as market related insights through their publications such as research papers, blogs and press releases related to the studies are referred to get cues about the market. Further, white papers, journals, magazines, and other news articles published in the last 3 years are scrutinized and analyzed to understand the current market trends.
- Primary Research:
The primarily interview analysis comprise of data obtained from industry participants interview and answers to survey questions gathered by in-house primary team.
For primary research, interviews are conducted with industry experts/CEOs/Marketing Managers/Sales Managers/VPs/Subject Matter Experts from both demand and supply side to get a 360-degree view of the market. The primary team conducts several interviews based on the complexity of the markets to understand the various market trends and dynamics which makes research more credible and precise.
A typical research interview fulfils the following functions:
- Provides first-hand information on the market size, market trends, growth trends, competitive landscape, and outlook
- Validates and strengthens in-house secondary research findings
- Develops the analysis team’s expertise and market understanding
Primary research involves email interactions and telephone interviews for each market, category, segment, and sub-segment across geographies. The participants who typically take part in such a process include, but are not limited to:
- Industry participants: VPs, business development managers, market intelligence managers and national sales managers
- Outside experts: Valuation experts, research analysts and key opinion leaders specializing in the electronics and semiconductor industry.
Below is the breakup of our primary respondents by company, designation, and region:
Once we receive the confirmation from primary research sources or primary respondents, we finalize the base year market estimation and forecast the data as per the macroeconomic and microeconomic factors assessed during data collection.
- Data Analysis:
Once data is validated through both secondary as well as primary respondents, we finalize the market estimations by hypothesis formulation and factor analysis at regional and country level.
- 3.1 Macro-Economic Factor Analysis:
We analyse macroeconomic indicators such the gross domestic product (GDP), increase in the demand for goods and services across industries, technological advancement, regional economic growth, governmental policies, the influence of COVID-19, PEST analysis, and other aspects. This analysis aids in setting benchmarks for various nations/regions and approximating market splits. Additionally, the general trend of the aforementioned components aid in determining the market's development possibilities.
- 3.2 Country Level Data:
Various factors that are especially aligned to the country are taken into account to determine the market size for a certain area and country, including the presence of vendors, such as headquarters and offices, the country's GDP, demand patterns, and industry growth. To comprehend the market dynamics for the nation, a number of growth variables, inhibitors, application areas, and current market trends are researched. The aforementioned elements aid in determining the country's overall market's growth potential.
- 3.3 Company Profile:
The “Table of Contents” is formulated by listing and analyzing more than 25 - 30 companies operating in the market ecosystem across geographies. However, we profile only 10 companies as a standard practice in our syndicate reports. These 10 companies comprise leading, emerging, and regional players. Nonetheless, our analysis is not restricted to the 10 listed companies, we also analyze other companies present in the market to develop a holistic view and understand the prevailing trends. The “Company Profiles” section in the report covers key facts, business description, products & services, financial information, SWOT analysis, and key developments. The financial information presented is extracted from the annual reports and official documents of the publicly listed companies. Upon collecting the information for the sections of respective companies, we verify them via various primary sources and then compile the data in respective company profiles. The company level information helps us in deriving the base number as well as in forecasting the market size.
- 3.4 Developing Base Number:
Aggregation of sales statistics (2020-2022) and macro-economic factor, and other secondary and primary research insights are utilized to arrive at base number and related market shares for 2022. The data gaps are identified in this step and relevant market data is analyzed, collected from paid primary interviews or databases. On finalizing the base year market size, forecasts are developed on the basis of macro-economic, industry and market growth factors and company level analysis.
- Data Triangulation and Final Review:
The market findings and base year market size calculations are validated from supply as well as demand side. Demand side validations are based on macro-economic factor analysis and benchmarks for respective regions and countries. In case of supply side validations, revenues of major companies are estimated (in case not available) based on industry benchmark, approximate number of employees, product portfolio, and primary interviews revenues are gathered. Further revenue from target product/service segment is assessed to avoid overshooting of market statistics. In case of heavy deviations between supply and demand side values, all thes steps are repeated to achieve synchronization.
We follow an iterative model, wherein we share our research findings with Subject Matter Experts (SME’s) and Key Opinion Leaders (KOLs) until consensus view of the market is not formulated – this model negates any drastic deviation in the opinions of experts. Only validated and universally acceptable research findings are quoted in our reports.
We have important check points that we use to validate our research findings – which we call – data triangulation, where we validate the information, we generate from secondary sources with primary interviews and then we re-validate with our internal data bases and Subject matter experts. This comprehensive model enables us to deliver high quality, reliable data in shortest possible time.
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