There is currently (ongoing) a global chip shortage, which is threatening to bring the internet payment system to its knees.
The Smart Payment Association has issued a statement highlighting the significance of payment cards in everyday life and business and warned that if the issue is not addressed, there would be major disruptions.
According to the organization, more than 3 billion EMV-based payment cards are created globally each year for those who create a bank account, as well as for those who renew their cards when they expire or for those who need to replace them.
However, owing to bottlenecks in the supply chain, card makers are experiencing increased difficulty in getting chips for their products.
According to the trade association for payment cards and the mobile payments sector, governments and other stakeholders should work together to improve the supply situation to avoid a severe disruption.
Nearly 90 percent of non-cash consumer purchases are made using cards at physical businesses, and they are also essential for obtaining cash, according to the report, which adds that payment cards are also responsible for 40-60 percent of online payments, either directly or indirectly.
As a result, maintaining an unbroken supply chain for payment cards is critical to the continuation of commerce and everyday life.
Chipmakers were forced to close their doors because of the epidemic last year. By the time they reopened, they had a significant backlog of work to do. As they hobbled back to the station, they were overwhelmed by an unexpected surge in worldwide demand for electronics.
Recent months have seen significant shortages of items such as personal computers, mobile phones and tablets, gaming consoles, and most notably automobiles, which have impacted the semiconductor sector. As a result of the insufficient supply of chips, equipment makers were forced to delay the start of their manufacturing lines. And it looks that the scarcity is now spreading to other industries as well.
The payment card sector, according to the organization, demonstrated its endurance throughout the pandemic by providing cards to banks under unprecedented conditions, including during lockdowns, wherever and whenever they were required.
“Another hazard has developed as a result of the worldwide chip shortage,” the trade association stated.
According to the group, chip supply constraints have reached critical levels, and card makers are experiencing growing difficulty in getting chips.
The shortfall is expected to persist into 2022, according to the association. It issued a warning that considerable disruption is anticipated on the way, which will have an impact on the capacity of card makers to satisfy the entire demand for their products.
The organization further said that it has taken steps to ensure a sufficient supply of payment cards, but that it believes that governments can do more.
It stated that the card makers who are collaborating with the organization are making “every effort possible” to prevent disruptions in card distribution.