It used to be that if you needed to urgently replace your credit card or debit card you could get one within a week or so. Not anymore. It can now take up to eight weeks to get a new card.
Over the years, credit cards have increasingly relied on chip technology for enhanced security. Embedded in those chips are a user's account number, identification information, and cryptographic keys that make cards more secure than when they had magnetic stripes. When pandemic-related supply chain disruptions led to a massive chip shortage, card manufacturers found themselves suddenly scrambling alongside other industries that also rely heavily on chip technology.
"Our industry is in competition, for example, with the car manufacturing industry," says Alain Martin who represents Thales, one of the world's largest payment card producers, on the Smart Payment Association. "They use the same kind of chip technology and so because of this competition, there's been greater demand, shorter supply, hence the delays."
'You don't need a plastic card with a chip!'
In many parts of the world, the act of pulling out a plastic card for a purchase belongs to a bygone era.
"The technology exists to do the whole thing totally differently," says Aaron Klein, who focuses on financial technology and regulation at the Brookings Institution and worked on economic policy at the Treasury Department following the 2008 recession. "America is behind the times. Our payment system is extremely outdated. In China, it's all done on smartphones in QR codes."
In China, 45% of adults used mobile payments daily in 2022, according to data gathered by the business intelligence firm Morning Consult. India ranked second in daily digital wallet use at 35%, while in the U.S. just 6% used their digital wallets daily, trailing behind Brazil, Spain, and the United Kingdom.
Klein believes the Federal Reserve, which regulates banks, has been slow to push the financial system to evolve and embrace more advanced systems. But another big reason the U.S. has been slow to move past the card system is because Americans have long been wary of digital wallets. Consumers haven't embraced the idea of flashing their phones to pay by mobile.
But the pandemic seems to be changing attitudes.
"Consumers were thinking more about social distancing, hygiene, and speed, moving through the queues in the stores in a more efficient manner," says Jordan McKee, the research director for financial tech practice at S&P Global Market Intelligence. "We saw certainly mainstream consumers across the board begin to gravitate more toward mobile."
Even though fewer Americans use digital compared to people in other countries, mobile payments of in-store purchases in the U.S. have increased significantly in recent years, from less than 5% of in-stores purchases a few years ago to roughly 30% today.
McKee says this sudden embrace could be a chance for the financial system to catch up with other advanced systems within the global financial system.
Until then, for those not quite ready to part ways with their plastic, experts say credit and debit card delays will likely continue through the year.
