Due to significant chip shortages, up to 1 billion payment cards are at risk of not being issued over an 18-month timeframe, with 347 million at risk in 2021 and up to 740 million in 2022, according to ABI Research.
“Although not necessarily getting the attention or the support from governments they deserve, payment cards are a critical enabler for global economies, both from a consumer and enterprise perspective,” said Phil Sealy, Digital Security Research Director at ABI Research.
Sealy said access to payment cards is a fundamental requirement to digitally transact and buy in both the physical and digital domains on a day-to-day basis.
“Most concerning is (is that a) lack of payment cards will directly translate into less purchases, which will ultimately have a detrimental impact on GDP,” he said. “The payment cards industry should be considered one of top chip supply priorities.“
Although the chip shortage impact has remained largely invisible through the first half of 2021, with the impact counterbalanced somewhat by existing stock levels, it is beginning to become very visible in the second half of 2021.
As the lead times from chip order to delivery continue to lengthen, 2022 should be considered the critical chip shortage impact year.
“Payment card ecosystem players need to strategise now and look toward implementing processes to help minimise market disruption to maintain a ‘business as usual’ approach as best as possible,” said Sealy.
Issuers may need to look to at prioritisation strategies, focusing on the replacement of expired cards first, or adopting a strategy whereby they prioritise one payment card form factor over another, such as credit over debit.
Sealy said that despite the long development lead time, additional cost, and effort required with implementation, strategies using chip multi-sourcing for the high-volume products should now be in full swing.
“Issuing banks should use the chipset shortage to audit themselves and streamline processes related to inventory management and card re-issuance,” he added. “Payment networks should be working on a short-term simplified certification process to help speed up capacity increases, with certification labs considered one of the market’s great bottlenecks.”
