The online payment system is being threatened by a global chip scarcity. The Smart Payment Association has warned that if the issue is not solved, it would cause major disruptions in ordinary life and trade. More than 3 billion EMV-based payment cards are manufactured each year for customers who open a bank account, renew them when they expire, or replace them, according to the report. However, owing to supply chain constraints, card makers are having increasing difficulty getting chips.
To avoid severe disruptions, the payment card and mobile payments industry’s trade association has urged government authorities and stakeholders to enhance supply. Nearly 90% of non-cash consumer purchases are done using cards at physical businesses, and they are also important for obtaining cash, according to the report, which also stated that payment cards enable 40-60% of internet payments directly or indirectly. As a result, maintaining a continuous supply chain for payment cards is critical to business and daily life.
Last year, the pandemic prompted chipmakers to close their doors. They had a backlog to clear when they reopened. As they hobbled back, they were slammed by an unexpected surge in worldwide demand for electronics. Major shortages of goods such as PCs, mobile phones/tablets, gaming consoles, and, most notably, vehicles have struck the semiconductor sector in recent months. Because there was insufficient supply of chips, equipment makers had to postpone their manufacturing lines. And it looks that the scarcity is spreading to other industries as well.
The body praised the payment card industry’s tenacity throughout the epidemic, saying it helped banks under unusual conditions, providing cards amid lockdowns wherever and wherever they were required.
“Now, with the global chip shortage another threat has been emerged,” the trade body added.
According to the association, the bottlenecks in chip supply have become critical and now, card manufacturers are facing increasing difficulties in obtaining the chips, and that this kind of shortage is likely to continue throughout 2022. It cautioned that considerable disruption is on the horizon, posing a threat to card makers’ capacity to satisfy full demand.
The association further added that it has initiated some actions to ensure an adequate supply of payment cards but urged governments to do more. They said further that, the card manufacturers working with the association are making “every effort possible” to minimise card delivery disruption.
