What is a key benefit of using DNS payments over RTGS?

Using DNS (Deferred Net Settlement) payments offers a key benefit in that it requires less liquidity for settling large volumes of transactions. This is particularly advantageous for financial institutions and businesses that may process a high number of transactions throughout the day. In a DNS system, payments are settled in batches at certain intervals rather than one by one in real-time like RTGS (Real-Time Gross Settlement) systems. This batching allows institutions to net their incoming and outgoing payments, which means that they only need to hold sufficient liquidity to cover the net amount of those transactions, rather than needing liquidity for each individual payment.

This feature is beneficial in managing cash flow and reducing the amount of capital tied up in settling each transaction in real-time. For organizations with high transaction volumes, this can lead to significant efficiencies and cost savings.

The other options, such as faster payment processing times, lower transaction fees, or guaranteed transaction completion, do not accurately reflect the unique advantages of DNS over RTGS. In fact, RTGS systems typically offer faster settlement as payments are processed and settled immediately, whereas DNS relies on batch processing, which can inherently take longer to clear transactions.