In a previous article from Mar 31, 2022, we explored the status of the ongoing chip crisis. Semiconductor chips had been slow to market because of pipeline disruptions, and they’ve since become more expensive for the payments industry. Let’s discuss what has changed since 2022, as well as where the industry is headed.
Toward the end of 2022, many technology companies began substantially ramping up chip production in order to mitigate the shortage, but they were confronted by a shortage of neon, which is a vital material used in the production of semiconductor chips. The neon shortage caused lasting impacts to the chip market, further feeding into the chip crisis.
Despite these supply bottlenecks, Gartner predicts that by the end of 2023, we will see demand and supply once again come into balance, and by 2024, there will be a surplus of capacity.
A Chip Alternative: Tap-to-Mobile
We spoke of how tap-to-mobile took off a year ago. Now, more than last year, 89 percent of Americans own a smartphone and up 4 percent since. The cost of accepting tap-to-mobile payments is still unchanged at $0. Yet, the cost of purchasing a payment terminal, especially for business founders, is still high, so tap-to-mobile, unlike tap-to-pay transactions involving a POS terminal, only requires a proprietary downloadable app.
Tap-to-mobile is preferred and the following are reasons why:
- Contactless transactions are still the preferred way to transact as the millennial generation’s need for mobile enterprises will be the biggest driver of this kind of demand for the next seven years.
- They only involve a short range wireless communication network that transmits data from your debit or credit card to a merchant’s mobile phone.
- It’s the safest method, because one-time codes sending encrypted financial information to merchants are frictionless.
- Completing a tap-to-mobile transaction is more secure than a regular chip or stripe payment.
- It’s still an easy setup process that underscores only needing to download the appropriate app, and entering your details, then start accepting payments.
Know Your Options, Protect Your Business
We don’t yet know when the chip crisis will end. Yet any changes sparked by the crisis have resulted in other technologies filling gaps. Tap-to-mobile and tap-to-pay fintech options available at Celero are just the beginning of learning how we guide our clients to be their best. These methods are changing the payments future, so contact us today to learn how Celero will help shape it.