Chip shortage hits payment cards

June 21, 2021 // By Nick Flaherty
Chip shortage hits payment cards
The Smart Payment Association (SPA) warns the chip shortage is hitting payment cards, where over 3bn devices a year are needed

The Smart Payment Association (SPA) in Germany is warning that the chip shortage is extending to payment cards out into 2022.

As customers have been fighting for allocation of capacity, the Munich-based SPA is warning that banks and other financial institutions have fallen behind.

“This year is marked again by consequences of the COVID-19 pandemic, with a global shortage of silicon chips threatening the supply of smart payment cards,” said the new president, Jacques Doucerain.

“The widely reported bottlenecks in chip supply have become so critical, that payment card manufacturers face increasing difficulties in obtaining chips needed to produce cards,” said the association. “That crisis is showing no sign of ending half-way through 2021 and will spread throughout 2022. The SPA foresees significant disruptions, in payment card production beyond the reasonable control of payment card manufacturers that will affect their ability to meet full demand.

The SPA says it has initiated actions with payment schemes, central banks and governments to obtain higher priority from semiconductor foundries for the production of chips needed for payment cards and to ensure their adequate supply. Payment card chips are typically on much older process technologies than chips for mobile phones, laptops and automotive designs, so the chip shortage looks to be the result of more demand during the pandemic and part of the general capacity issue in the industry, rather than a consequency of the automotive chip shortage.

The association includes some of the largest payment card supplier in the world, such as Thales Digital Identity and Security, which includes Gemalto, as well as Giesecke+Devrient and Idemia, the result of the merger of OT (Oberthur Technologies) and Safran Identity & Security (Morpho).

“Securing an uninterrupted supply chain for payment cards is essential to daily life and commerce. As payment cards are issued upon opening a bank account, renewed regularly after their expiration date or replaced in emergency when a card is lost or compromised, each year more than 3 billion EMV-standard based payment cards need to be produced and delivered to consumers worldwide,” says the association.

“During the pandemic, the payment card industry demonstrated resilience and served banks in unprecedented circumstances. The industry was recognized as essential in most Covid-lockdowns world-wide and was therefore able to continue delivering cards wherever and whenever needed. This took a major effort on the part of payment card operations teams, supported also by governments, banks and payment schemes.”

The Trusted Connectivity Alliance (TCA)   is also flagging potential issues with the supply of SIM cards.

"Looking ahead to the next eighteen months, silicon manufacturers will likely need to manage the challenge of limited foundry capacities. If this is the case, the global silicon industry, including the SIM sector, will continue to be affected throughout the remainder of this year and 2022," it said. 

Telecom network providers are used to SIM suppliers operatig on a reactive basis, supporting a timeframe of several weeks from chip manufacture to delivery of a complete SIM product but in the current global climate however, the ability of SIM suppliers to react as quickly may be restricted, so longer-range planning is advised, says the TCA.

www.smartpaymentassociation.com

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