What is one reason DNS payments generally cost less per transaction than RTGS payments?

The choice regarding less liquidity being utilized in settling payments as a reason why DNS (Deferred Net Settlement) payments generally cost less per transaction than RTGS (Real-Time Gross Settlement) payments is accurate.

In DNS systems, transactions are accumulated and settled at specific intervals rather than in real time. This means that payments can be aggregated and settled in a batch, allowing the financial institutions to optimize their liquidity and reduce the need for immediate funds. Because only the net amounts are settled at the end of the processing period, it generally requires less immediate cash flow than RTGS, which settles each transaction individually and requires full liquidity at the point of processing. This batching can result in lower operational costs and fees associated with the handling of each transaction, contributing to the overall reduced cost per transaction in DNS payments.

In contrast, RTGS payments necessitate that each transaction has sufficient liquidity available at the moment it is processed, which can lead to higher costs associated with maintaining liquidity and executing each transaction individually. This fundamental difference in transaction processing and liquidity management is why DNS payments can be more cost-effective on a per-transaction basis.