Chip Shortfalls Will Plague Payment Card Deliveries Through 2023, the SPA Warns

Snarled supply chains and production shortfalls continue to plague the semiconductor industry, leading the Smart Payment Association to warn early Thursday that significant shortages in card deliveries will continue in the payments industry for at least another 18 months.

What’s more, these credit and debit card deliveries that are being made are coming late, delayed by “extended lead times” for plastic, metal, and other materials required to manufacture cards, the Munich-based association said. Recent factory closures in China in reaction to Covid outbreaks have exacerbated a supply squeeze that had already gripped the industry, the SPA said. Crimped freight capacities in international shipping and supply-chain disruptions have lingered, adding to the shortfall, the association added.

The SPA’s members include the major chip card manufacturers and technology providers Thales, Giesecke + Devrient, and Idemia. CPI Card Group, Infineon, Linxens, NXP Semiconductors, and ST Microelectronics are members of the group’s advisory councils.

While the SPA did not quantify the expected card shortfall, it noted 2.63 billion smart payment cards and modules shipped globally last year—a number that would have been higher absent the global chip shortage. “SPA members suffered from chip allocations preventing them from fully serving the demand of their customers,” the association said in its statement.

A global chip shortage stemming from the effects of the pandemic has impacted the payments industry in other ways as well, for example severely crimping the supply of terminals.

Now, noting the “uninterrupted supply of payment cards is essential to the social and economic lives of billions of citizens around the globe,” the SPA says card makers are working to mitigate the problem. Measures include tighter inventory management, more accurate forecasts, and “closer collaboration” with materials suppliers. But the group said it is also supporting legislation in Europe and in the United States it hopes will help solve the supply issue.

Three-quarters of all non-cash payments in 2020 were conducted with cards, including when used through digital wallets, the SPA noted. “Payment cards are also critical for accessing cash,” the group added.