Tokenization: The Future of E-Commerce Growth by 2025

Tokenization, the process of replacing sensitive data with unique identifiers or tokens, is poised to revolutionize e-commerce by enhancing security, streamlining operations, and enabling new business models.

Global retail e-commerce sales are projected to grow to $6.8 trillion by 2028, accounting for 24% of total global retail sales, according to Forrester. This rapid expansion underscores the critical role of seamless digital experiences in driving consumer engagement and conversions.

Amid this digital evolution, consumer expectations for frictionless and secure checkout experiences are surging. Merchants, however, face a significant challenge: cart abandonment. Research from the Baymard Institute reveals that approximately 70% of online shopping carts are abandoned before checkout, often due to friction or a lack of trust in the payment process.

Security at checkout is a critical concern, especially as e-commerce fraud is projected to grow from $44 billion in 2024 to over $107 billion by 2029, according to Juniper Research. Tokenisation addresses this by eliminating the need for consumers to enter card details, reducing the risk of fraud and data breaches. Mastercard has committed to 100% tokenisation in Europe by 2030, with Mark Barnett highlighting its role in creating a more secure ecosystem by removing real card numbers from online transactions.

Tokenisation has emerged as a pivotal technology to enhance the checkout experience, addressing both consumer demands for security and convenience and merchants’ goals of reducing friction and abandonment rates. This innovation replaces sensitive payment card details with a unique token, ensuring transactions are both secure and seamless.

While keeping up with rapidly changing payment preferences can feel daunting for merchants, Expert warns that failing to adapt means losing revenue. Tokenised payments, which provide both security and flexibility, offer a compelling solution for merchants striving to meet consumer expectations and reduce cart abandonment.
Tokenisation also supports advanced authentication methods like biometrics, enhancing both security and convenience. Mastercard has already observed tokenisation reducing cart abandonment and increasing transaction approvals by three to six percentage points. While it isn't foolproof, tokenisation stays ahead of evolving fraud tactics.