The card manufacturing industry is experiencing an industrial revolution that is being driven by the pandemic. Although the timing and breadth of recovery is still uncertain, rebounding from COVID-19 will be gradual with some card types being impacted more than others. The International Card Manufacturers Association (ICMA)’s recent webinar, Cards in the time of Coronavirus, addressed the outlook for recovery, as well as new market trends that will emerge as a result of the pandemic.

Not surprisingly, there has been an increase in online transactions, as well as a drive toward contactless cards, which eliminate tactile contact with POS equipment.

Credit card use has increased and consumers are charging everyday purchases. For example, grocery store purchases, which are typically card-present transactions requiring a card and a point-of-sale (POS) device, have transitioned to online and curbside pickup as consumers want to shop from home to protect their health.

In the United States, there have been drastic changes in customer behavior driven by COVID-19. Card-not-present transactions and the customer shopping experience have completely shifted.

As a result of the pandemic, the U.S. card market, which is five years behind the rest of the world in deploying contactless payment, is now ripe for widespread adoption. Americans are reconsidering handling cash, with many people switching to contactless payments to deter the transmission of the coronavirus.

“The tap-and-go feature of contactless cards is now seen as a health benefit,” said Keith Yeates, CEO of Bristol ID Technologies. “As a result, we are seeing a shift to contactless, as well as a hybrid product in which a card is not present for a transaction.”

The pandemic will likely boost demand for contactless cards, spurring accelerated usage in the United States. It may also drive consumers to be more receptive to using a mobile phone for payment. Although it will likely be a slow shift, mobile is expected to gain traction.

The health care and governmental segments have remained stable throughout the pandemic. Meanwhile, the educational sector is expected to rebound quickly with a demand for student and staff ID badges that have been put on hold for the past several months. With so many cards being distributed remotely, fulfillment could gain steam, for example, filling orders such as student ID badges remotely.

“Some markets will rebound stronger than they were prior to the pandemic,” said Yeates. “As recovery begins, we are paying careful attention, making sure we have the right levels of inventory on hand so that when certain markets rebound quickly, we will be prepared to meet those opportunities.”

However, some nonsecure card markets like hospitality and event management will be slow to pick up as people are not traveling, staying in hotels or attending events. For these markets to rebound, consumers will need to be confident in the new health and safety protocols that are in place.

The transportation sector will also be slow to recover as people will be resistant to travel in close proximity to one another on planes, buses and subways for quite some time.

Prior to the pandemic, ICMA’s 2019 Global Card Market Statistics Report found that among market segments, gift cards showed the strongest volume growth in 2019 with a 7.1% increase over the prior year. Though the effects of the current global crisis on in-store gift card spending remains unknown, gift card manufacturers are hopeful that volume will pick up again when retail stores reopen and the economy begins to gain momentum. The market will likely remain strong where it already has a firm hold and will bounce back in other sectors as recovery from COVID-19 comes.

Amid the pandemic, card manufacturers used the downtime to accelerate new projects, taking advantage of the lull in production to anticipate customer needs.

“We’ve had more than enough time to think of new products,” said Michael Dorner, CEO of VariusCard, a European card manufacturer. “Due to the lockdown of the country, a lot of Austrian companies were not able to buy products from Asia or eastern Europe, so they had to source from Austria. This led to new business for us and even resulted in the development of a completely new product, the world’s first crypto stamp, which is now being used by the Austrian postal system.”

Dorner encourages card manufacturers to view the pandemic as an opportunity. “We have a wide range of equipment that we can use for several types of products,” he said. “We need to use this time to make sure that we have a second line of product offerings to rely on so that we can spread the risk out across our product portfolio.”

Card manufacturers agree that transparency has been key in communicating with customers and employees throughout the pandemic.

“We are being flexible in how we support our customers, implementing e-commerce solutions to simplify ordering, extending lead times and lengthening payment terms,” Yeates added. “Opportunities always come from times of adversity, and we are looking for the opportunities that will come from this. If we pursue those opportunities, the card industry will emerge stronger.”

Want More Industry Insider Insights or a Glimpse into Global Card Trends?
For three decades, ICMA has represented the interests of the card manufacturing industry—which includes manufacturers, personalizers, issuers and suppliers—as its leading global association.

ICMA offers regular educational opportunities, including the web-based Card Industry Training & Education program, which provides information on key areas of the industry, as well as tutorials and webinars from industry experts. ICMA also provides reports on the card market and on personalization and fulfillment statistics to keep members informed of emerging trends and changing forecasts.

Throughout the year, ICMA members have the opportunity to share insights and knowledge by giving presentations at ICMA events, webcasts and tutorials. The organization hosts three conferences each year. The main event is the annual Card Manufacturing & Personalization EXPO and the other two conferences are CardTREX North America and CardTREX Europe.

Learn more about the benefits of an ICMA membership.