Global tokenized payment transactions will exceed 1 billion by 2026 as ‘one-click’ services expand

Global tokenized payment transactions are expected to grow by 47% to more than one trillion by 2026 starting this year, as the e-commerce industry’s adoption of secure “one-click” transactions and Internet of Things (IoT) solutions continue to grow, according to Juniper Research.

Around 680 billion transactions are expected in 2022, as fast transaction solutions such as click-to-pay and autofill payment details continue to grow, according to research from the UK-based company.

Tokenization is the process of replacing high-value items, such as bank cards and account details, with alternative codes called “tokens” that have little or no intrinsic value.

This enhances security by removing the most valuable data that cybercriminals can steal during the transaction process.

“Payment data protection is an integral part of the security of the payments ecosystem. In an increasingly interconnected world, with an increasing number of payment options, the need for strong security solutions is clear,” said Juniper.

Card networks are driving the mass adoption of tokenization to improve payment approval rates as well, he said.

“With so many payment methods currently in use, the need to ensure consumer data is protected across all channels is only growing.”

The Far East and China region will account for about a third of the tokenized transaction market by 2026, with IoT solutions expected to lead the growth.

IoT-based payments — transactions made using connected devices beyond smartphones and computers, including wearables, cars, and home appliances — are expected to see the highest market growth of tokenization over the next five years.

Tokenized IoT transactions are expected to reach around 19 billion by 2027, a fivefold increase from 3.8 billion in 2022, according to the study.

“Tokenization is key to facilitating IoT payments, enabling transactions to be conducted through new use cases and form factors, and unlocking new revenue opportunities for payment providers,” the report states.

The volume of tokenized online and mobile e-commerce transactions is expected to increase by 74% by 2026, driven by growing customer expectations for a faster and frictionless payment experience offered by one-stop solutions. click.

Market growth will also be driven by benefits such as saving time for the end user due to the elimination of the need for customers to re-enter payment details while shopping online.

However, many organizations have yet to embrace tokenization, given the long development cycle.

“Tokenization vendors, other than the already advanced card networks, must begin to evolve their own IoT tokenization solutions or risk missing out on this lucrative opportunity,” the report said.

Updated: July 19, 2022, 03:48

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