The total number of tokenised payment transactions will exceed 1 trillion globally by 2026, rising from 680 billion in this year, according to a new study from Juniper Research.
This represented growth of 58 percent over the next four years.
The market researcher attributed this growth to the rise of “one-click” solutions, such as Click-to-Pay, using card-on-file tokenisation to store a customer’s payment credentials; enabling them to auto-fill their checkout details and complete transactions via a single click.
Tokenisation is a process by which sensitive information can be protected from others who do not have the proper authorisation to view or manage it.
The payments industry uses it to protect the Primary Account Number (PAN) of a card by replacing it with a unique string of characters.
This prevents the malicious actors from gaining access to payment data in the event of a data breach.
Key drivers for tokenisation growth was being driven by the increasing adoption of one-click solutions by merchants within eCommerce to reduce friction, and by card networks, who were encouraging mass adoption of tokenisation at the network level to improve payment approval rates.
The new report predicted that online and mobile eCommerce-tokenised volume would grow by 74 percent by 2026. This growth was driven by the increasing customer expectation of a frictionless checkout experience, which one-click solutions via tokenisation offer.
The growth would also be driven by benefits, including time savings for the end user by eliminating the need for customers to re-enter payment credentials when shopping online.
The research also identified IoT payments as offering the largest growth among the tokenisation market over the next five years, with tokenised IoT transactions expected to reach 19 billion by 2027, growing 400 percent from just 3.8 billion in 2022.
Tokenisation is critical in facilitating IoT payments; enabling transactions to be made via new use cases and form factors, unlocking new revenue opportunities for payment providers.
Given tokenisation solutions’ long development cycle, tokenisation vendors, other than the already advanced card networks, must begin scaling their own IoT tokenisation solutions or risk missing this lucrative opportunity.
BUSINESS REPORT