Increasing Financial Fraud in Ecommerce is Expected to Drive the Growth of the Tokenization Market

The rapid growth of eCommerce has heightened the demand for secure payment solutions. Merchants experienced a surge in payment fraud, rising from $17.5 billion in 2020 to over $20 billion in 2021—an 18% increase. As shopping moved online and away from cash and physical cards, fraudulent activities grew. According to Cryptomathic, in November 2019, eCommerce saw an alarming volume of credit card declines, leading to significant penalties for merchants from payment networks. U.S. merchants faced around $8.6 billion in declined card-not-present (CNP) transactions annually, while only $6.5 billion in fraud was actually prevented, indicating a false decline rate of about $2.1 billion each year.

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As eCommerce continues to evolve, so does the landscape of fraud. Tokenization has emerged as a reliable solution in this space. Today, mobile devices are increasingly preferred for payments over traditional computers and other technologies. Tokenization enables secure mobile transactions by allowing card payments without exposing the original card details. eCommerce organizations are integrating tokenization into their mobile apps to protect sensitive customer data while ensuring privacy and security. Consequently, the rising need for modern fraud management solutions is anticipated to drive growth in the tokenization market.