Many commentators would argue the humble credit card is one of the most important financial innovations of the past 60 years. The reason behind its yet-unrivaled success has much to do with an economic theory known as the two-sided market, whereby a powerful network effect attracts both buyers and sellers, in this case cardholders and merchants, onto a platform for the purposes of commerce.

The network effect is in play when a platform is able to continuously deliver increased value for all participants as it grows in size. In the case of the credit card market, the more consumers adopt plastic, the more likely merchants are to install credit card processing machines – and vice versa. This has given rise to a powerful network effect, one fintech providers are finding hard to dislocate. So far PayPal has come the closest to replicating this network effect in the SME payments space, however it still requires the rails of the schemes in order to do so.

It is important to note that not all two-sided marketplaces generate a network effect. This type of phenomenon is the pot of gold – lucrative and extremely hard to find. A two sided marketplace is also rarely equal in terms of revenue generation and acquisition costs. More often than not acquisition of one side of the market is subsidized by monetization of the other. In fact subsidization is generally a prerequisite for platform success.

We see this in play in the credit card market. Today, for the most part, sellers are asked to bear the lion’s share of the cost of card acceptance, paying a percentage (or sometimes a fixed fee) to a merchant acquirer to accept a card payment for the purchase of a good or service by a customer.

Yet as the acceleration of cash displacement by plastic picks up, many small business owners are feeling the full brunt of this ‘seller pays’ model. It also doesn’t help that credit cards themselves are getting more expensive, with platinum and gold cards becoming the norm. Cardholders, excluding American Express customers, are often unaware that these premium cards attract higher processing costs for a merchant. Small businesses argue that the charges incurred by these cards are effectively subsidizing cardholders, allowing card issuers to promote 60 day interest repayment terms and offer generous frequent flyer loyalty programs.

However the subsidization ‘double whammy’ for small businesses gets somewhat more nuanced than just that. Cross subsidization, many business owners argue, is also at play within the merchant community itself. This is due to the lower card processing fees large ‘strategic merchants’ receive from acquirers, due to their larger card volumes and thus better bargaining power. The Reserve Bank of Australia (RBA) estimates that due to this imbalance, non-strategic merchants (small businesses) have been cross subsidizing strategic merchants, paying 50 basis points more on the average credit card interchange rate. In Australia relief may be in sight with an RBA proposal set out in December 2015 to cap interchange fees to 0.80%. But only time will tell if this has any material impact. Similar caps on interchange have also been implemented in Europe.

Of course, the debate is equally vigorous on the flip side, and the cost of not accepting payments via credit card is one merchants are somewhat attuned to. MasterCard suggests that “on average, the value derived from accepting credit cards is more than five times the amount paid in interchange.” American Express has presented data in the Australian discussion regarding merchant service fees, indicating its cardholders spend on average 36-38% more per transaction than Visa and MasterCard cardholders. Even today, this positive pill is hard to swallow, with many small business owners still opting to not accept American Express credit cards due to the perceived high transaction costs, failing to recognize the possibility of higher returns per dollar spent on fees.

So while there is significant weight to the argument that card fees are simply the ‘cost of doing business’, like any other utility payment, there is some hope in the small business community that smart fintech and new payment technologies that attack the core could solve this ever increasing card fee conundrum.

The question is, how can fintech really disrupt this space? From a cardholders perspective, there really isn’t a problem to solve – the network effects of the credit card market have served consumers extremely well. But from a small business owners perspective, the marketplace returns are diminishing. In Australia we now see more price signalling in the form of surcharging, with merchants finding ways to push costs back to consumers. Needless to say, this is causing headaches for consumers, schemes and card issuing banks alike.

Zero cost acquiring is the nirvana for this sector of the market. If an alternative payment network can link buyers and sellers together, with significantly reduced costs for merchants and better benefits for buyers (I hesitate to call them cardholders, as this would limit our imagination), then perhaps traction can be achieved. No one has cracked this nut as yet with any significant scale, but plenty of people have ideas – Quora has an excellent thread on the topic with some influential respondents to boot.

Fintech could throw this problem on its head. Small business is getting more global and payments are more omnichannel than ever before. Blockchain is the obvious technology play, but its method of implementation in the small business arena is still hazy and unclear. What is clear is that this problem will require imaginative thinking. But the rewards for those that are brave enough to do so will be enormous. And far likely to be greater than a simple pot of gold.