Tokenization is the method of replacing complex data with distinctive symbols of authentication that maintain all the relevant data without compromising their safety. They are specifically intended to prevent unauthorized access to the significant data and information. They are widely used in businesses and so they can enhance credit card safety and e-commerce activities while reducing the cost and risk of adherence with industry and government norms. As compared to the conventional methods in which the credit or debits pins and number were stored in databases and were transferred via networks; tokenization make sure that hacker doesn’t get access to the cardholders sensitive information. This technology is widely used in different industries such as healthcare, IT and Telecom, government, banking, financial services and other.
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Some of the factors responsible for the growth of this market are following:
- Growing prevalence for cloud-based tokenization solution: The cloud based tokenization is very beneficial as they protect the data from both external and internal factors. It is decoded only by the payment processor. This security decreases the chances of fraud and other security threats. It is also very advantageous for the merchants as they don’t have to uses many resources so they can make the payment infrastructure secure. They can be applied on any personally identifiable information such as usernames, password, patient records and others
- Rising demand for contactless payment solutions: Contactless payment is a safe technique for customers to use RFID technology or near-field communication (NFC) to buy products or services using a debit, credit or smartcard. Using contactless payment is very beneficial for the customer and businesses. EVM chip technology takes lots of transaction time but contactless payment eliminates the friction and helps the customer to get better shopping experience. More than other forms of payments, the chip technology used in contactless payments is actually more secure. So the fraud cases associated with the contactless payment is very less
Global tokenization market is segmented on the basis of component as solution, services; application area is segmented as payment security, user authentication, compliance management; tokenization technique is application programming interface (API)-based, gateway- based; deployment mode is cloud, on- premises; organization size as small and medium-sized enterprises, large enterprises and vertical as banking, financial services, and insurance, government, retail, healthcare, it and telecom, energy and utilities, automotive, education, and others.
Few of the launches and acquisitions by prominent player in the market are as follow:
- In June 2019, Visa announced that they are going to acquire the ticketing and tokenization business named Bell ID and Ecebs LTD from Rambus. This acquisition will be merged with the company’s network tokenization capabilities which will help them to provide better and secured payments. With this acquisition they will be able to provide more security beyond the card so they can support more transaction
- In May 2019, Blockstream announced the launch of their new platform which is specially designed so they can help the users to launch their own tokens by utilizing its bitcoin sidechain, Liquid. This app will help the user to manage and track their security token. This liquid secutities platform will provide platform to the businesses where they can monitor their token
“According to Data Bridge Market Research, global tokenization market is set to witness healthy CAGR of 22.45% in the forecast period of 2019- 2026”
Few of the major competitors currently working in the global tokenization market are First Data Corporation, Gemalto, Fiserv, Inc, Micro Focus, Symantec Corporation, Thales eSecurity, WEX Inc., CipherCloud, Futurex, OpenText Corp., Worldpay, Protegrity USA, Inc., TokenEx, Bluefin Payment Systems, Sequent Software Inc, Discover Bank, Carta Worldwide, Ingenico Group., Verifone., Mastercard., Merchant Link, Rambus.com.
Tokenization is very beneficial as they make the process of payment more secure and easy. They are providing the user with smooth payment experience by reducing the complexity associated with the data breaches. They make sure that they protect the user data. Tokenization makes it considerably easier to achieve and maintain compliance with industry laws. They not only can be used with credit card plastics but can be work with apple pay, NFC payments and others. This is the factor which is accelerating its demand in the market.
