Tokenized Payments to Grow by Nearly 50% in the Next Four Years

The increased use of click-to-pay solutions and payments linked to the internet of things will drive the growth of tokenized payment transactions, which will exceed one trillion transactions by 2026.

The intense and relentless digitization of both society and the economy that we have been experiencing in recent years is giving rise to numerous changes. And one of the areas that is evolving the most is payment transactions, seeking more agile and, at the same time, more secure solutions.

In this context, tokenized payments are one of the solutions that is gaining momentum. Tokenization consists of protecting customers’ payment credentials as they are stored, replacing their confidential data with tokenized values that have no intrinsic value. In this way, if a cybercriminal gains access to this data, they do not have access to the user’s payment information. In addition, it is a system that facilitates frictionless payment, streamlining operations. And it also means greater convenience and time savings for the user, as he does not have to search for his card and re-enter all his data each time.

These features will favor the popularization of this type of solution in the coming years. According to the report ‘Payment Tokenisation: Key Opportunities, Segment Analysis & Market Forecasts 2022-2027‘, prepared by Juniper Research, 1 trillion tokenized payment transactions will be made in 2026, compared to the 680,000 million transactions that will be made this year, which represents a growth of 47% in this period.

The study justifies this growth by the rise of click-to-pay solutions, in which the payment card is tokenized, storing the customer’s payment credentials, allowing them to automatically fill in their payment details and complete transactions with a single click.

The consultancy points out that e-retailers are embracing this type of solution, as it allows payment friction to be reduced and therefore encourages transactions to go through. In fact, e-commerce is one of the drivers of tokenized payment. The research advances that the volume of tokenized ecommerce and mcommerce will grow by 74% in the period 2022-2026, driven by the growing user expectation of a frictionless, one-click payment experience without having to enter their data over and over again.

In addition, Juniper Research believes that tokenized payments linked to the internet of things (IoT) will also skyrocket in the coming years. According to its forecasts, 19 billion tokenized IoT transactions will be made by 2027, a five-fold increase over the number of transactions made this year (3.8 billion). The consultancy highlights that tokenization is key to facilitating IoT payments, enabling new use cases and new ways of transacting to emerge, thus unlocking revenue opportunities for payment providers.