March 30, 2020
Written by
James Davis
Written by James Davis
Senior Technical Writer at United Thinkers

Author of the Paylosophy blog, a veteran writer, and a stock analyst with extensive knowledge and experience in the financial services industry that allows me to cover the latest payment industry news, developments, and insights. Read more

Reviewed by
Kathrine Pensatori
Product Specialist at United Thinkers

Product specialist with more than 10 years of experience in the Payment Processing Industry. I help payment facilitators and PSPs solve their various payment processing issues. Read more

Stock Market Crash and Cost Reduction

While half a year ago the economic recession was only a possibility, the 2020 stock market crash turned it into a tangible fact. The unprecedented impact of coronavirus on economy of all major countries triggered the end of an 11-year bull-market run. It made the key market indices plummet several times during a 3-week period in February and March 2020. Unfortunately for companies, shareholders, and consumers alike, the stock market crash today is not an abstract idea but the reality they have suddenly “woke up into”.

Any business is constantly striving to increase its revenues, even in times of economic recession. During a bull market, the intuitive rule of thumb is increasing sales. However, during the bear market following the stock crash this rule might not work, as opportunities for sales increase become scarce. At such times the more plausible approach to follow should focus on a sound cost reduction strategy. 

Why transaction processing cost reduction matters

In the electronic payment processing world average transaction cost, roughly, ranges from 1.5% and 3.5% of its amount. If a company’s profit margin amounts to, say, 10%, even 1% reduction of processing fees clearly makes a difference. And this difference becomes even more visible on large transaction volumes. Moreover, in a broader sense, transaction cost includes items beside credit card processing fees. These “indirect costs” include, for example, the cost of technical support and maintenance of processing solutions.

How to reduce transaction cost after 2020 stock market crash

To be honest, recommendations on transaction cost reduction remain more or less the same. Only in times of crisis, they become as relevant as ever. So, here are the most common approaches, allowing you to reduce both direct and costs, associated with transaction processing.

Processing cost reduction

As we mentioned before, if you manage to decrease the payment processing costs, your net profit increases significantly. All transactions processed after cost reduction become more profitable. Even a slight reduction of processing fees might result in substantial savings.

In order to be able to negotiate lower transaction fees with your current or new processing partner, you need to consolidate your processing volume under a single processing or gateway solution.
Additionally, you need to carefully analyze indirect and opportunity costs related to payment processing. They are not as easy to detect as high processing fees, but they comprise a substantial share of overall costs. So, if you can reduce any of them through the re-direction of your efforts and resources to higher-priority tasks, it is time to do so.


Technically, process automation helps you eliminate or avoid indirect costs and unnecessary resource expenditures. There is need to automate every process related to merchant life-cycle. These processes include merchant underwriting, onboarding, and funding, payment reconciliation, transaction settlement, reporting, refund and chargeback management, etc. Are any of these procedures performed manually within your business model? If the answer is positive, it is high time to automate them and redirect the free hands to higher-priority tasks.


Making your payment ecosystem more transparent in the eyes of its users (merchants and, possibly, their customers) helps you partly remove the burden from the shoulders of tech support personnel. Fewer calls to customer support staff and lower cost of tech support services will result in overall cost reduction.

Flexibility and innovation

Implementation of the first three approaches might require you to switch to an innovative and flexible payment technology. Even if it was not your plan before the recession, this might be the right moment. Although the transition takes time, effort, and resources, the new solution will be more robust, functional, transparent, and universal. And there is no need to start everything from scratch. Some payment software products, such as UniPay Gateway by United Thinkers, are available in both cloud (hosted) and licensable open-source-code versions. In contrast to strictly pre-defined feature sets, these solutions can be customized according to your particular business needs and requirements.

Payment Gateway Project Seems Complex?

To summarize

Now might be the right time to reduce your payment processing costs through implementation of a new gateway/processing solution. It might cushion the negative impact of the economic recession, triggered by 2020 stock market crash, upon your company. Coronavirus business impact increases the relevance of electronic payments (including contactless, card-not-present, mobile, in-app, and other payment methods) and, consequently, calls for adjustments of existing payment processing solutions. In this situation, resorting to flexible payment technologies, such as UniPay Gateway, might prove a powerful and robust cost reduction strategy.

Feel free to request free consultations with our payment specialists and learn how UniPay Gateway can help you reduce your payment processing costs.

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