After causing a long waiting list for smartphones, personal computers, and gaming consoles, the global chip shortage is now threatening the supply of another indispensable item: the cards you use to pay every day.
The Smart Payment Association (SPA), a trade organization in the card and mobile payment industry, has warned that bottlenecks affecting semiconductor production are currently penetrating some payment card manufacturers, who face difficulties in ensuring the safety of required components to produce goods.
Due to the shortage showing no signs of ending for at least a year, this may bring some significant problems to consumers.
If the situation does not improve, millions of cards will be lost, which will have a direct impact on global consumers. They will not be able to obtain or update bank cards. Without cards, you will not be able to make payments in stores, online, or withdraw cash, "said Jacques Doucerin, president of SPA.
Payment cards are used for 90% of non cash transactions, and up to 60% of online payments are also supported by precious cards, including digital wallet solutions.
Every time a bank account is opened, a payment card must be issued; They must also be regularly updated after the expiration date and replaced in case of loss or damage in emergency situations. SPA stated that in summary, 3 billion payment cards are produced and delivered globally every year.
The vast majority of these cards are referred to as "smart" because they contain a highly secure chip for storing and processing the data required for transactions. The most common standard for smart payment cards is the widely used EMV (abbreviation for Europay, MasterCard, and Visa), which is used globally for contactless, contactless, and mobile transactions.
Therefore, ensuring the uninterrupted supply of card chips is crucial for global businesses and consumers.
In the past few months, the semiconductor industry has been hit by severe shortages due to the increasing demand for digital products such as personal computers and tablets during the COVID-19 pandemic. Equipment manufacturers heavily reliant on the chip industry, such as consumer electronics, have had to delay production lines; The shortage is also rapidly expanding to other departments.
The automotive industry has been particularly hit hard, with automakers such as General Motors and BMW even having to temporarily close some factories due to a lack of parts.
The survey results of SPA indicate that similar issues are likely to affect smart payment card manufacturers in the second half of 2021 and worsen in 2022. SPA predicts that the card shortage in 2022 will be much more severe than in the second half of 2021, "Doucerin said.
Doucerin explained that extending the expiration date of an existing card is not an option, as he believes that in addition to confusing customers, it will also make the card more susceptible to fraud.
He continued to say that manufacturers in the semiconductor industry will change their priorities to ensure sufficient supply for smart payment card manufacturers.
In other words, the industry should not allocate resources to device manufacturers, such as in the smartphone industry, but prioritize payment cards that are more important to the economy.
Card issuance interruption will have a direct negative impact on consumers, merchants, and banks. In the case of capacity allocation in wafer foundries, bank card allocation must have priority, "Doucerain said. SPA is currently in communication as there is still time to improve this situation, provided that the semiconductor industry modifies its priorities
In order to gain higher priority in chip production, SPA has taken action with central banks and government agencies to urge a more equitable distribution of semiconductors among industries