The advent of Digitalization and Secure Payments will drive Tokenization Market Growth
The tokenization market revenue in 2022 was US$ 1.5 billion. The market is expected to reach US$ 13.81 billion by 2033, as it is estimated to grow at a CAGR of 22.6% from 2023–2033. Introducing tokenization into the financial landscape will be revolutionary and will transform business processes involving investment management, use, and monetization. With tokenization, companies are able to create a wide range of new financial products that allow corporations and individuals to diversify their portfolios on a global scale.
Tokenization allows companies to encrypt data securely, protecting confidential information. By creating more secure, transparent, and accessible markets, tokenization benefits both issuers and investors. With increasing awareness and real-life applications of this technology, momentum is also expected to grow. Globally, tokenized illiquid assets alone are predicted to account for over $16 trillion of global GDP by 2030, according to some experts.
Payment information can be securely stored and invoices can be processed automatically through tokenization. Customers can make purchases more easily by using tokenization to securely store their payment information. The use of tokenization can facilitate mobile payments, making it possible for users to pay from their phones so easily, without any limitations, and without even logging out.
Through tokenization, fraud can be detected and transactions can be prevented from becoming fraudulent. Keeping personal information secure and storing digital identities can be achieved through tokenization. The tokenization of customer loyalty information can allow companies to efficiently keep track of customers and reward them. Digital gift cards can be issued using tokenization, and their associated information can be securely stored.
Tokenization is becoming increasingly popular due to the widespread implementation of blockchain-based tokenization’s, demonstrating that tokenization will be the future. Asset ownership can be easily and securely transferred through tokenization. In addition to tokenization being able to fractionally own an asset, it also includes the ability to obtain dividends on the tokens. By tokenizing digital assets, consumers have the option to make smaller, more affordable investments, improving their ability to trade digital assets and making them more accessible to a wider range of people.
Smartphone uses and internet use have surged in India recently, resulting in a growing e-commerce market and rising earnings for consumers. A major change in the way businesses in India are conducted is the rise of e-commerce, which, in its own way, has brought about huge changes that are open to many different types of businesses, such as consumer-to-consumer, business-to-business, direct-to-consumer, consumer-to-business (C2B) transactions and retail. Over the last few years, major D2C and B2B markets have experienced tremendous growth. Cardholders have been encouraged to tokenize their cards by India's central bank, the Reserve Bank of India, in order to make card transactions more secure.
Tokenization promotes both growth and inclusion in the financial markets by managing traditional assets using wallets and blockchain infrastructure. The Ghent University found that if adoption rates were high and the technology was well adopted by governments, tokenization could save up to €4.6 billion (£3.93bn) by 2030. Furthermore, with tokens, there are many customized opportunities that enable the user to participate in the old world of traditional finance and the new world of digitization simultaneously, bringing a tremendous amount of benefit to both.
In order to raise additional capital easily and quickly, entrepreneurs can customize and design security tokens carefully. Furthermore, greater transparency can be achieved when data flows are frictionless, provided that adequate regulations and policies are instituted. According to the Digital Assets and Registered Exchanges Act, 2020, it is an express prohibition to sell or redeem digital tokens for fiat currency or other digital assets. The DARE Act defines the circumstances under which initial token offerings are subject to registration. Further, upcoming tokenization applications are expected to be more valuable and innovative in the long run, particularly with assets that weren't previously accessible to the general public.
Data Points
Key Statistics
Estimated Base Year Value (2022)
US$ 1.5 billion
Expected Market Value (2023)
US$ 1.8 billion
Anticipated Forecast Value (2033)
US$ 13.81 billion
Projected Growth Rate (2023 to 2033)
22.6% CAGR
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Tokenization Market Overview
Tokenization market is set to witness steady growth during 2021-2031. One of the major growth drivers for the tokenization happen to be increasing need to adhere to compliances and regulations.
Additionally, the mounting need to preserve fraud prevention levels due to increased financial crimes is further responsible for driving the market growth.
Moreover, increasing demand for contactless payments from customers coupled with growing need for cloud-based tokenization solutions and services are anticipated to offer rewarding prospects for the major players operating in the market.
What is Driving Demand for Tokenization?
Tokenization makes use of a token to protect the data, whereas encryption utilizes a key. Tokenization switches the sensitive data for a non-sensitive token and stores the original data securely.
Owing to this, there has been rise in demand for implementation of tokenization techniques over the forecast period. Moreover, increasing inclination of consumers towards contactless payment solutions is one of the major factors responsible for driving the growth of tokenization market across the globe.
Furthermore, stringent rules and regulations enforced the governments is further driving the market growth. The rising need for enterprises to adhere to the stringent regulations happens to be one of the major factors boosting the demand for tokenization across different industry verticals.
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BFSI is Expected to Hold the Largest Share of the Tokenization Market by Vertical
On the basis of vertical, the sensor market has been bifurcated in to BFSI, healthcare, IT and telecom, government, retail and eCommerce, energy and utilities, and others.
Out of which, the BFSI industry vertical is expected to hold the largest share of the global market. Tokenization solutions have gained immense popularity and a higher rate of adoption in the BFSI vertical, as it deals with money. The vertical displays a large number of financial transactions, which become an attractive target for cybercriminals. Increasing fraudulent activities emerging in the BFSI vertical is another major factor driving the demand for tokenization.
The USA and Canada Tokenization Demand Outlook
The USA happens to be one of the largest markets for tokenization across the globe. The growth in U.S. is attributed to the presence of established players such as Fiserv, Mastercard, Visa, Micro Focus, and American Express, among others in the region. Moreover, US happens to be a highly regulated region with the presence of regulations such as CCPA.
Changing customer preferences towards the adoption of digital first credit cards and contactless cards are also projected to boost the growth of tokenization in the North America region.
Increasing implementation of cloud-based tokenization solutions and services is another major factor driving the market growth across the globe. The other factors stimulating the market growth in the region include the rising demand for eCommerce and increasing use of smartphones for online payments, among others.
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Europe Demand Outlook for Tokenization
Contactless payments are helping end users as well as organizations move further away from wire transfer services, which happens to be one of the most exploited medium for cyber attackers.
Contactless payments are typically gaining more traction in the Europe region. According to a report published by Gemalto, 90% of the business frontrunners in Europe are already investing in the contactless payment solutions. Intensifying data breaches and financial frauds happen to be one of the major factors driving the demand for tokenization in the Europe region.
Who are the Key Manufacturers and Suppliers of Tokenization?
Some of the leading providers of tokenization include
The major companies operating in the market are focused on new product launches and business expansion strategies in order to enhance their product portfolio and expand their presence in the market.
For instance, In July 2020, BOB Financial Solutions Limited, a subsidiary of Bank of Baroda, has chosen Fiserv in order to enable digital transformation in its processes. The company aims to digitize their processing cycle and the process of card issuance and further support the launch of numerous new and high-tech products launched by the bank.
The report is a compilation of first-hand information, qualitative and quantitative assessment by industry analysts, inputs from industry experts and industry participants across the value chain.
The report provides in-depth analysis of parent market trends, macro-economic indicators and governing factors along with market attractiveness as per segments. The report also maps the qualitative impact of various market factors on market segments and geographies.
