A new study from Juniper Research has found the total number of tokenised payment transactions will exceed 1 trillion globally by 2026; rising from 680 billion in 2022. This represents growth of 58% over the next four years.
It attributes 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 protects customers’ payment credentials when stored; replacing sensitive data with token values that hold no intrinsic value. This prevents malicious actors from gaining access to payment data in the event of a data breach.
Tokenisation growth is being driven by increasing adoption of one-click solutions by merchants within eCommerce to reduce friction, and by card networks, who are encouraging mass adoption of tokenisation at the network level to improve payment approval rates.
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Drive for Frictionless Checkout Is Catalysing Growth
The new report predicts online and mobile eCommerce-tokenised volume will grow by 74% by 2026. This growth is driven by the increasing customer expectation of a frictionless checkout experience, which one-click solutions via tokenisation offer.
Growth will 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.
IoT Payments Are the Future of Tokenisation
The research also identified IoT payments as offering the largest growth amongst the tokenisation market over the next 5 years, with tokenised IoT transactions expected to reach 19 billion by 2027, growing 400% 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.