Monday , August 15, 2022

More Than Token Progress: Tokenized Payments Will Hit 1 Trillion by 2026, Juniper Predicts

The total volume of tokenized payment transactions worldwide will exceed 1 trillion by 2026, up from 680 billion this year, according to a report released Monday by Juniper Research. The growth will come mostly from click-to-pay options that allow buyers to pay with a single click, using tokenized credentials, the firm says.

These options, offered by major card networks like Visa and Mastercard, rely on tokenized cards on file to back up authorizations for payments. The option is growing in popularity because of its convenience, as it allows consumers to fill in details at checkout, and complete payment, with one click, the United Kingdom-based research firm says. As a result, the number of tokenized transactions online and in mobile commerce will increase 74% between this year and 2026, Juniper predicts in its new report, “Payment Tokenisation: Key Opportunities, Segment Analysis & Market Forecasts 2022-2027.”

But the biggest growth over the next five years will come from the Internet of Things, which will account for 19 billion tokenized transactions by 2027, up from 3.8 billion this year, a 400% growth rate, according to Juniper’s report. IoT payments include commerce between payment-enabled objects, such as clothing, watches, and automobiles and sellers of products and services.

This development in particular could offer fresh opportunities for payments processors. “Tokenization 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,” Juniper says in a release about the new research.

But the report also issues a warning: Technology providers will have to gear up fast to leverage this growth, particularly in view of the long development cycles tokenization software is subject to. “Tokenization vendors, other than the already advanced card networks, must begin scaling their own IoT tokenization solutions or risk missing this lucrative opportunity,” Juniper warns.

Tokenization came largely in response to fraud caused by stolen payment card credentials. It replaces these valuable data points with information of no or little value to data thieves. The international standards body EMVCo developed the first standards for tokenization in 2014. Card networks like Visa Inc. and Mastercard Inc., which are among the international networks that own EMVCo, have been some of the earliest adopters of the technology.

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