Don’t lose your credit card, a new one could take months
When Ed Delaney contacted his credit union in early November to get a credit card issued for his wife, he was told it would arrive in about 10 days. Weeks rolled by and no card. It took until January to learn why: not enough microchips.
Credit and debit card issuers are feeling the full effects of a global semiconductor shortage that has plagued the automobile and technology sectors since chip demand spiked during the pandemic. Now consumers like Delaney, 67, of Spokane, Wash. — who called his credit union repeatedly before the card arrived in early February — are feeling it, too. “It was a major inconvenience to us,” he said.
Wait times of six weeks or more have become common — particularly for credit union members — compared with the five- to 10day turnarounds seen in the past. And the problem isn’t going away: Patrick Penfield, a professor of supply chain practice at Syracuse University, expects card deliveries will lag throughout 2023, even as manufacturers are projected to produce 3 billion of them this year.
Demand for cards with EMV chips is high: By the end of 2021, 63 percent of U.S. cards carried the distinctive silver or gold squares, according to payment technology standards body EMVCo. From July 2021 to June 2022, chip-enabled cards were swiped in 85 percent of transactions made in the United States, and 92 percent globally. Manufacturers can’t keep up: Lead times for chips now average 20 to 25 weeks, according to Everstream Analytics, which specializes in supply chain risks, compared with a pre-pandemic range of 10 to 14 weeks.
Lewis Black, the chief executive of Toronto-based Almonty Industries, one of the world’s largest producers of tungsten concentrate, a semiconductor component, says the chip shortage was exacerbated by the limited number of factories adept at building them, as well as fierce inter-industry competition, which collectively kicked the credit card sector to the bottom of the priority pile.
“It’s really a storm,” Black said.
A sudden surge
perfect
Though Europeans have been using chip-enabled credit cards for nearly a decade, Americans are still playing catch-up.
“In the U.S., cash is king — that was how everybody rolled,” Black said.
But that changed during the pandemic as consumers tried to limit contact with people and unsanitary surfaces, he said. The EMV chip was the answer — you could just tap your credit, debit or prepaid card at check-out. The technology also makes transactions less susceptible to fraud.
That coincided with a wave of online shopping, particularly for electronics such as laptops, sales of which surged nearly 40 percent between the second and third quarter of 2020, according to the U.S. Bureau of Economic Analysis. Car sales saw a comparable rebound during that time frame, forcing chipmakers to ramp up production.