According to a new market report published by Transparency Market Research , the global tokenization market was valued at US$ 1,267.8 Mn in 2016 and is estimated to expand at a compound annual growth rate of 18.6% from 2018 to 2026, reaching US$ 6,901.1 Mn by the end of the forecast period. According to the report, North America was the largest contributor in terms of revenue to the tokenization market in 2016. This is primarily due to strong technological advancement and considerable application of tokenization in banks and financial institutions across the region
Need for payment card industry data security standard (PCI-DSS) compliance to secure cardholder data driving the global tokenization market
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PCI DSS guidelines state that merchants and companies that process and store credit card data must fulfill precise audit requirements for managing cardholder data and privacy. Tokenization, a method of replacing sensitive data such as credit and debit card numbers with tokens, is one of the audit scope reduction and data protection methods that is recommended/suggested by PCI DSS. Tokenization helps merchants to comply with the global PCI-DSS and assists payment processors to keep cardholders’ data secure. This in turn is expected to drive the tokenization market during the forecast period.
The global market for tokenization is segmented on the basis of component, solution, enterprise size, end-use, and geographic regions. Based on component, the market has segmented into software, hardware, and services. Hardware component accounts for the largest share in terms of revenue in the global tokenization market. Hardware component used for tokenization are hardware security module (HSM) and other tokenization appliances which are used for interaction with HSM. Hardware devices are generally used in vault-based tokenization where sensitive data is stored within the user’s premises. However, service (tokenization-as-a-service) segment is expected to expand at the highest CAGR of around 19.8% globally during the forecast period.
Based on solution, the market has been segmented into payment security, customer data management, compliance & policy management, omni-channel management, and encryption. On the basis of enterprise size, the market has been divided into small & medium enterprise and large enterprise. In terms of end-use, the market has been bifurcated into BFSI, retail & consumer goods, government, education, military & defense, automotive, IT & telecom, energy & utilities, manufacturing, and others (hospitality & transportation).
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Based on geography, the global tokenization market has been segregated into North America, Asia Pacific, Europe, South America, and Middle East & Africa. North America led the global tokenization market with a substantial share in 2016, primarily due to rising deployment of tokenization solutions for various applications such as payment security and customer data management across organizations operating in North America, particularly in the U.S. which has given impetus to the tokenization market.
Asia Pacific is anticipated to witness highest growth in terms of adoption of tokenization solutions during the forecast period. This is primarily due to the rising adoption of digital services such as Internet of Things (IoT), cloud, mobility, and Artificial Intelligence, leading to the rising trend of high amount of data from the APAC region.