The payments industry considers 2022 to be the make-or-break year for the market. With stocks now largely depleted, the exact extent of the chip shortage impact is being felt. Global technology intelligence firm ABI Research forecasts payment card shipments to reach 3.029 billion in 2022, a slight drop from the 3.11 billion shipments in 2021. The payment cards market has proved more resilient to the effects of the pandemic and ongoing chip shortage than initially anticipated, particularly when compared to other smart card verticals, such as SIM cards.
“Despite another year of issuance decline, the market was able to minimize the impact owing to closer collaboration with issuing banks and by utilizing existing stock levels to minimize supply impacts. Better than expected activity in Latin America, alongside a continuation of low-level growth in Europe, near counterbalanced significant market reductions in North America, which declined YoY, driven by the U.S. and its reissuance cycles,” explains Sam Gazeley, Digital Payment Technologies Research Analyst at ABI Research.
The industry should begin to see additional capacity becoming available at the end of 2023. However, recovery will not match issuance levels seen in pre-COVID years. Growth will be limited compared to previous expectations due to a continuation of chip supply constraints, increases in component, material, and supply chain costs as well as consumers looking to reduce spending and debt where possible, owing to the global rise in inflation and energy costs which will contribute to lower transaction volumes in the near future.
“A recovery to standard issuance levels will likely not become a reality until around 2025, coinciding with the resolution of supply constraints, replenishment of depleted stock, and, from 2023, an increase in chip production, which will close the gap between demand and supply,” Gazeley concludes.