Global Chip Shortage Could Affect Supply of Credit / Debit Cards
After causing long waiting lists for smartphones, PCs and gaming consoles, the global shortage of chips is now threatening to imperil the supply of another pretty indispensable item: the card that you use every day to make payments.
Global chip shortage is now threatening to derail the online payment system. The Smart Payment Association (SPA), the trade body for the cards and mobile payments industry, has warned that the bottlenecks that are currently hitting the production of semiconductors is trickling down to some payment card manufacturers, who are facing difficulties securing the components they need to produce the items. It said each year more than 3 billion EMV-based payment cards are produced globally for people who open a bank account, or those who renew them after expiration or to be replaced. But card manufacturers are facing increasing difficulties in obtaining chips due to bottlenecks in the supply chain.
The trade body of payment cards and the mobile payments industry has called on government bodies and stakeholders to improve the supply situation to avoid major disruption. Nearly 90 percent of non-cash consumer payments are made using cards in physical stores and they are also critical for accessing cash, it said, adding that 40-60 percent of online payments are supported directly or indirectly by payment cards. Thus, securing an uninterrupted supply chain for payment cards is essential to sustaining commerce and daily life.
The pandemic forced chipmakers to shut operations last year. By the time they reopened, they had a backlog to fill. In recent months, the semiconductor industry has been hit by major shortages of products such as PCs, mobiles/ tablets, gaming consoles, but especially automobiles. Equipment manufacturers had to delay their production lines as there was not an adequate supply of chips. And it appears the shortage is now expanding to other sectors too.
The association said the bottlenecks in chip supply have become critical and card manufacturers are facing increasing difficulties in obtaining chips, and that this shortage is likely to continue throughout 2022.