On Monday, the Smart Payments Association (SPA), the Munich-based trade body representing the global cards and mobile payments industry, warned that the ongoing shortage of chips due to covid-related supply chain and logistics bottlenecks in semiconductor-producing countries, could soon seriously impact the availability of chip-based payment cards.
In a statement released on Monday, SPA noted that nearly 90 percent of non-cash consumer payments worldwide are made using cards in physical stores, as well as for accessing cash. In addition to this, 40-60 percent of online payments are supported either directly or indirectly by payment cards.
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For those reasons, securing a smooth supply chain for the issuance and delivery of payment cards is essential to daily life and commerce. Each year, more than 3 billion EMV-standard based payment cards are produced and delivered globally. While the payment card market showed exceptional resilience during covid, disruptions in global chip supply due to second-order effects from initial waves of the virus–which the SPA now expects will continue for the rest of 2021 and spread throughout 2002–could result in “significant disruptions in payment card production beyond the reasonable control of payment card manufacturers that will affect their ability to meet full demand.”
SPA says it has initiated actions with payment schemes, central banks and governments to obtain, from semiconductor foundries, higher priority on the production of chips needed for payment cards and to ensure their adequate supply.
Last month, the SPA’s 2020 analysis of the payment industry sector found that 2.5 billion cards were shipped in 2020, despite a measurable decrease in demand from China, India and Latin America due to covid-related national lockdowns. During the year, 69 percent of all card shipments had contactless functionality–i.e., “tap-and-go” functionality not requiring entry of a PIN number–an increase of 10 percentage points from 2019.
As a result of the increase in chip-enabled contactless payment functionality, SPA says every country in the world now issues dual interface cards (i.e., cards with contactless as well as PIN-enabled features), including Mexico, Indonesia and India, markets that SPA says have historically been slow to embrace contactless payment cards.
