The payments landscape is littered with the bones of ideas that didn’t make it.

Some of them simply may not have been viable ideas. But many have been great ideas – some were even the brainchildren of people with vast experience in payments who struck out to connect the dots in a different way, or projects originating from large companies with plenty of capital behind them.

For a payment innovation to be successful, it must gain critical mass on two sides: issuing and acquiring. This is a concept known as the “network effect.”

As participation in a networked system grows, that system becomes more valuable to all the other participants. As the system becomes more valuable, it attracts more participants, resulting in a natural cycle of growth.

For both issuers and acquirers of a transaction, it’s important that the other side have critical mass.

If you issue a card that can only be used in one place, it will have limited utility. At the same time, if a merchant must invest in the equipment and the processes to acquire a certain type of transaction, it must determine that the investment is worthwhile – that enabling that type of transaction will attract consumers, increase loyalty and sales, or lower their acceptance costs.

A successful network must then have certain elements to succeed. Even the presence of these elements is not enough to guarantee success, but failure on any single component can kill even a truly great idea. End-to-end processors – third-party entities that process transactions on both the issuing and acquiring sides – are well-positioned to provide many of these elements.

An end-to-end processor connects the varied pieces together. It can provide the infrastructure and the standards to enable the ecosystem to fully function. And it can push on multiple fronts and build acceptance of a payments network with its broad reach, all elements that give the system its best chance of building on itself and becoming successful.

Processors are key to building these effects so the payment devices have the broadest possible purchasing power for the consumer.

For more on how end-to-end processors can help build network effects, including the current example of mobile acceptance, read the full article in the March issue of the Lydian Journal.